As February is coming to a close, the so-called ‘Alameda Gap’ still persists in the crypto market. Liquidity remains far from the levels seen before the infamous FTX collapse last November. Researcher Kaiko tweeted that this month as well, the Gap persists, with Bitcoin (BTC) “market depth still well below November levels.” The quantity of BTC-USD(T) bids and asks within 2% of the mid-price aggregated on 16 exchanges hovered around 8k BTC in February — 40% less than in October.

The FTX exchange, along with its parent company Alameda Research and a number of subsidiaries, filed for bankruptcy back in November last year. Kaiko noted the existence of the ‘Alameda Gap’ that very same month, arguing that typically, liquidity plunges occur during periods of volatility as market makers rush to manage risks.

Riyad Carey, research analyst at the company, was quoted by Bloomberg on Friday as saying that, “It’s not just Alameda, although they were one of the biggest. Other market-makers took a hit and are being more cautious. […] It really depends on the token, but I’d say there’s still a 20-40% gap from previous liquidity levels. When there’s less liquidity, we tend to see that prices are more volatile in both directions, which has been the case in the past couple months.”

Strahinja Savic, head of data and analytics at FRNT Financial, was quoted as saying that Three Arrows Capital (3AC), Celsius Network, and numerous other crypto funds, both well-known and not, are responsible for this gap. Therefore, the trading volumes drop at the end of 2022 can likely be tied back to the “elimination” of these companies.

Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, said that thin liquidity suggests that larger traders are not back in the market yet. She added that she would expect the continued climb in volatility since the beginning of the year to gradually entice some of the large players back into the market.

Kaiko also noted that BTC and ETH market depth hit its lowest point since May 2022. The “liquidity in native units continued falling last week, hitting its lowest level since the Terra collapse,” it said.

As for the prices, back in November, BTC fell to the $15,700 level, but has since climbed up to the current $23,283. At 10:00 UTC on Tuesday morning, it was down 0.5% in a day and 6% in the past week. At the same time, ETC was trading at $1,621, down 1% over the last 24 hours and 4.7% over the last 7 days. This is a significant rise since November 2022 when it had plunged to $1,095.