Market Depth Dries Up Over the Weekend, Potentially Signalling a Bitcoin Bottom

According to data tracked by Hyblock Capital, market depth (the collection of buy and sell orders, both close to and far from the current market price) has dwindled over the weekend. This pattern often appears at market turning points, suggesting that the downward trend in Bitcoin from its August high above $65,000 may be coming to an end.

Liquidity, represented by market depth, measures a market's ability to absorb large trade orders without significantly impacting prices. It tends to be affected by factors like time of day, ongoing market events, and specific price levels.

Market bottoms are characterized by hesitant traders, leading to fewer buy and sell orders and reduced liquidity.

Shubh Verma, Co-Founder and CEO of Hyblock Capital, told CoinDesk: “By analyzing the aggregate spot order book, particularly the order book depths of 0%-1% and 1%-5%, we have found that low order book liquidity typically coincides with market bottoms. These low order book levels can be an early indicator of price reversals, often preceding bullish trends.”