Ethereum's native token ether had a better third quarter than bitcoin . Still, it got harder to trade, as liquidity, or how easily a token can be bought and sold without moving its price, thinned out.
Ether's price surged 70% in the quarter, outpacing bitcoin's 42% gain. Yet between July 6 and Sept. 30, its median daily market depth was just 35% to 45% of bitcoin's, according to a report by CoinGecko. In the same period last year, it was at least 60%. CoinGecko called it "a stark drop from last year's figures."
Market depth is the standard way to measure liquidity. It's the total dollar value of buy and sell orders sitting on exchanges within a set distance of the current price. The deeper the market, the more money it takes to move the price. In a thin market, a large order quickly eats through available orders and pushes the price further.
Ether had $13 million to $14 million in depth within 0.15% of its market price. In simple terms, that's roughly how much money was sitting in orders close enough to the price that clearing it would move ether by just 0.15%. Depth this close to the price matters most for everyday trades, and for large orders that traders want filled without moving the market.
The data undercuts a popular idea in markets that rising prices pull in more traders, and more traders mean deeper order books. That didn't happen with ether.
15% of the market price], with most exchanges maintaining over $1 million in depth on each side," CoinGecko said.
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