Analysis of the Alameda Gap Impact on the Bitcoin Market

Analysis of the Alameda Gap Impact on the Bitcoin Market

The recent research conducted by Kaiko, a renowned crypto research firm, sheds light on the ‘Alameda Gap’ and its significant impact on the Bitcoin and crypto market. The ‘Alameda Gap’ refers to the liquidity gap that emerged following the collapse of the defunct crypto exchange FTX and its associated entity, Alameda Research, which was a major market maker providing substantial liquidity to the market. The aftermath of Alameda’s collapse left a void in liquidity, as market makers adopted a cautious approach, waiting for sentiment and trading activity to stabilize. However, according to Kaiko’s latest report, the market seems to have moved beyond this phase, with the gap no longer in existence. The market depth has nearly fully recovered and returned to its pre-FTX average, signaling a positive shift in market conditions.

Kaiko’s research findings indicate a notable improvement in market liquidity, attributed to the surge in Bitcoin’s price, which has outpaced market liquidity growth following the SEC’s approval of Spot Bitcoin ETFs earlier this year. Bitcoin’s price has risen by approximately 50% year-to-date, reaching new highs, including an all-time high of $73,750. As a result, the 2% market depth for Bitcoin has increased by 40% year-to-date and briefly surpassed its pre-FTX average of $470 million. This uptrend is a positive indicator of Bitcoin’s resilience and attractiveness to investors in the current market environment.

Kaiko’s research report also highlights the Bitcoin-to-Gold ratio, which measures the relative performance of both assets. The ratio is approaching its all-time high, last recorded in November 2021, signifying Bitcoin’s outperformance compared to Gold. This trend is further evidenced by the influx of funds into Bitcoin ETFs, amounting to $11 billion since their launch in January, while physically-backed Gold ETFs such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) have witnessed outflows during the same period. This shift towards Bitcoin as a preferred store of value is evident in the changing investor preferences and market dynamics, leading many to view Bitcoin as the ‘new global store of value’ in the digital age.

Looking ahead, industry experts like Samson Mow, CEO of Jan3 and a prominent Bitcoin advocate, foresee a future where Bitcoin surpasses Gold in terms of monetary value. Mow’s prediction of Bitcoin reaching $1 million involves the gradual demonetization of Gold in favor of Bitcoin, as investors recognize the unique features and benefits offered by the leading cryptocurrency. As Bitcoin continues to gain traction and establish itself as a reliable asset class, the traditional notion of Gold as the ultimate store of value may be challenged, paving the way for a new era of digital wealth and investment opportunities.

The evolving dynamics of the Bitcoin and crypto market, along with the changing perceptions of traditional assets like Gold, present a compelling narrative for investors and enthusiasts alike. As market conditions improve, and Bitcoin asserts its dominance as a viable investment option, the Alameda Gap fades into the annals of history, marking a new chapter in the ongoing evolution of digital finance and decentralized technologies.


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