A month ago, Bitcoin reached its highest peak, over $60,000, weighing the current crypto market frenzy. Other altcoins joined the wild Bitcoin swings. However, nothing seems to stop crypto enthusiasts looking for high returns, even when the leading digital coins trade at nearly $40,000.
However, regardless of the hype in the current bullish move, inadequate crypto liquidity remain a challenge for traders, market makers, token issuers, and exchanges. Indeed, expert crypto traders cannot access international liquidity or find lucrative global prices for increased earnings.
The current situation in the crypto market has forced token issuers to list their assets on multiple exchanges for more client visibility. That has amplified costs to develop business and force token issuers into purpose sectors. There is a need to understand these categories for the crypto market to achieve an upward trend.
Market fragmentation is the underlying issue causing illiquidity. Keep in mind that cryptocurrency is more than stock investment. The crypto idea was to form a new way to handle money. Though with the many digital coins in the crypto space, businesses not accepting crypto limits its usage.
Fragmentation played a role in attracting more consumers to the cryptocurrency.
The Centralization Approach
Industry professionals have formulated various solutions due to the fragmented market complexity. Some of them advise on centralized approaches to deal with liquidity. Standardizing markets and centralizing virtual coins will prevent investors from the complex and fractured assets and prices network. Without the negative issues of fragmentation, traders will trade rapidly instead of waiting for wider margins.
Although this can seem comprehensive at first, the resolution is unsustainable. First and foremost, centralization is against the crypto philosophy. Experts see no need for centralization in a market that grew with rejection by centralized currencies. Such a move would separate the market.
Growing Towards DeFi
It seems like DeFi is the only solution to crypto liquidity. Decentralized finance will reduce market fragmentation and establish a distributed connectedness, protecting the crypto atmosphere. Most crypto firms operate like stock exchanges or banks, where you will have to pay usage fees whether a buyer or a seller. The best thing is that DeFi spreads all the costs and benefits among the participants. DeFi solutions protecting decentralized liquidity seem to be the solitary way for the crypto space.