XRP Liquidity Fails To Recover After Massive October Crash

Liquidity across major digital assets like XRP, Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) remains fundamentally depressed, Kaiko data shows.  

The cryptocurrency has been severely affected by the devastating deleveraging event that occurred on Oct. 10, and it is unclear how it is going to recover.  

The mayhem has led to the contraction in order book depth that continues to plague the leading digital currencies well into this April. 

Bitcoin would enjoy a robust 1% market depth, hovering around the $8 million mark before the crash. However, liquidity instantly evaporated after the massive shock. BTC’s market depth plummeted to a terrifying low of roughly $3 million. It remains distinctly below its pre-crash highs.

Kaiko’s chart reveals that ETH, XRP, and SOL suffered parallel and sustained declines. XRP and Solana, which occupy the lower liquidity bands on the chart. Six months later, their market depth lines have flatlined. 

The crash effectively wiped out highly leveraged depth. On the bright side, this could pave the way for genuine institutional price discovery.

Why Oct. 10 broke the market

The crash was so violent that many industry observers believe it effectively “broke” the overly leveraged structure of the market.

According to data cited by CoinGlass, the flash crash triggered the largest single-day liquidation event in cryptocurrency history. A staggering $19 billion in leveraged positions were wiped out in under 24 hours. 

The historic wipeout obliterated the market makers and leveraged long positions that had been artificially inflating order book liquidity.