Research shows: Up to 97% of cryptocurrencies have virtually no liquidity.

After ten years since the birth of Bitcoin, many different cryptocurrencies from various fields and visions have been introduced in the market. However, a study on the liquidity of cryptocurrencies reveals that almost all cryptocurrencies (altcoins) actually lack liquidity and are on the brink of bankruptcy.

Liquidity in the trading market refers to the ability of investors to buy and sell specific assets without affecting their prices. If the trading volume of cryptocurrencies is high, it indicates high liquidity, lower spreads, and easier matching of buyers and sellers.

According to the liquidity data from CoinPaprika, if "low liquidity" is defined as a spread within 10% in the exchange order book and buy/sell orders of less than $10,000 for a cryptocurrency, as much as 95% of cryptocurrencies will be classified as low liquidity.

In other words, cryptocurrencies classified as low liquidity still have a 5-10% spread within orders of less than $10,000. Additionally, 2% of cryptocurrencies are rated as having extremely low liquidity.

A report indicates that only 48 cryptocurrencies have liquidity exceeding $1 million. Currently, Bitcoin remains the cryptocurrency with the highest liquidity, reaching $1 billion.

Although CoinMarketCap estimates the total liquidity of cryptocurrencies to be around $500 million, which differs slightly from CoinPaprika's data, it still highlights the fact that the majority of altcoins have very low liquidity.

Ethereum has the highest liquidity among altcoins, reaching $200 million. EOS ranks third with $78 million, followed by Litecoin at $77 million, Ripple at $73 million, and Bitcoin Cash (BCH) at $62 million.

Following these rankings, liquidity for other cryptocurrencies drops sharply, with only 14 cryptocurrencies having liquidity exceeding $10 million.

In reality, the lack of liquidity for most altcoins may be good news. With the initial coin offering (ICO) craze that began in 2017, much of the market capital flowed into numerous ICO projects.

As this speculative frenzy subsided, a majority of the capital returned to Bitcoin, increasing its dominance from 32% in early 2018 to the current 69%.

Essentially, the crypto space is now focused on top cryptocurrencies, aiming to build better infrastructure and increase adoption rates. This presents a safer and more stable environment for cryptocurrency traders and investors, paving the way for the evolution of the cryptocurrency market in 2020.

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