The marquee asset of cryptocurrencies is Bitcoin. The mildly informed have heard of Ethereum and maybe Ripple with it’s token XRP, but there are actually some 6000 listed cryptocurrency/blockchain projects with more showing up every day. As a new asset class, it is not without growing pains, and chief among them is liquidity.
Wall Street has long decried the barriers to entry in crypto overall but has now, grudgingly perhaps, come to embrace Bitcoin and to a lesser extent, Ethereum. Still, their participation in anything is virtually non-existent.
The difficulty in investing in cryptos are storied and often exaggerated. Their risks of hacks and the difficulty of navigating the blockchain are known and real enough but this is not a deterrent to the technologically savvy and investment banks have dedicated tech departments. So what’s keeping them out of game-changing projects that have a far bigger upside than Bitcoin? Liquidity.
There is simply not a large enough market to trade, and the insufficient volume has wrought havoc on the space. Historically, trading in all but the biggest crypto assets could move the market. It has been rife with manipulation and has turned many a trade into long-term depreciating, involuntary investments.
So what about the rest of these 6000 plus projects? Without needed demand to induce active trading for their token has left founders watching a volatile asset while contending with nonplussed supporters. Without needed price discovery and the ability to easily move in and out of trade positions, these assets suffer and the space gets something of a black eye.