Cryptocurrency trading volume hits 2-year low, liquidity crisis exposes the market's false prosperity

Since the beginning of 2026, Bitcoin and the cryptocurrency market have shown a steady upward trend, but beneath the surface of prosperity, there are warning signals. According to the latest statistics from on-chain data analysis firm Glassnode, the spot trading market is facing a liquidity crisis, with the overall trading volume of cryptocurrencies dropping to the lowest level since November 2023. What exactly is hidden behind this abnormal phenomenon?

Plummeting Spot Trading Volume Exposes Market Participation Crisis

Data shows that although Bitcoin prices continue to rise, currently around $90.16K, the actual trading activity in the cryptocurrency buy and sell market appears sluggish. The decline in spot trading volume indicates that the real buying and selling power within exchanges has significantly weakened, serving as the best barometer for assessing genuine market participation.

In a healthy bull market, rising prices are usually accompanied by increased trading volume—new funds continuously entering the market for turnover, existing holders taking profits in batches, and a transition of capital between old and new investors. However, the current situation is quite different: Bitcoin and competing coins are soaring in price, yet total spot trading volume has fallen to a nearly two-year low, revealing a typical “rising price with shrinking volume” divergence. This suggests that the actual capital needed to push prices higher is decreasing, and real buying and selling activities are contracting.

Insufficient Order Book Depth and the Formation of a Liquidity Ice Age

More concerning is that the liquidity environment on centralized exchanges has not yet recovered to pre-crisis levels. During the massive liquidation storm in October last year, about $19 billion of highly leveraged positions were forcibly liquidated within just a few hours. This market “bloodbath” not only wiped out over-leveraged speculators but also profoundly changed the market’s liquidity structure.

Market makers and liquidity providers, after experiencing that intense volatility, chose to wait and withdraw, leaving the order book depth still below pre-crash levels. What does this mean? When large transactions occur, they face more severe slippage risks than before. In an environment of extremely low liquidity, a trade that might previously cause only a 0.5% slippage could now trigger a 3% or even larger price fluctuation.

Hidden Risks of Price Rise with No Volume

From the perspective of cryptocurrency trading, a price increase with no volume carries significant risks. When prices rise but trading volume shrinks, market resilience actually diminishes. Any moderate sell-off could instantly break this fragile ice.

Experienced traders have already sensed these warning signals. On the surface, Bitcoin has gained over 7.5% since January 1, with a current 24-hour change of +0.50%, and the market appears to be thriving. But dancing on the frozen layer of liquidity, one must always be cautious of sudden pitfalls. This upward trend built on extremely low trading volume lacks sufficient market participation support. Once selling pressure starts, a sharper correction than expected could occur.

For investors active in the cryptocurrency buy and sell market, the current apparent prosperity may just be a “mirage.” With market liquidity not truly restored, it is essential to carefully observe order book depth and monitor changes in spot trading volume to avoid risks.