BTC and ETH Liquidity Strengthens One Year After Flash Crash, but Altcoin Risks Persist

Bitcoin and Ether have recovered their order book liquidity a year after the October 10, 2025, crypto flash crash, while altcoins continue to face declining market depth and weaker trading activity. Despite the rebound in major cryptocurrencies, spot trading volumes remain far below their peak during the crash period.

The latest market data highlights an uneven recovery across the crypto sector. Bitcoin and Ether now have more buy and sell orders near their market prices than they did on the day of the crash or at the beginning of 2026. Smaller cryptocurrencies, however, continue to lose liquidity as market participants concentrate their capital in the largest digital assets.

On Oct. 10, 2025, Bitcoin was trading around $122,600 after reaching a record high above $126,000 earlier that week. Within hours, its price dropped below $105,000, with much of the sell-off taking place within minutes during thin U.S. evening trading. The decline followed President Donald Trump’s announcement of 100% tariffs on Chinese imports and triggered more than $19 billion in leveraged liquidations in a single day.

To examine how market conditions have changed, CoinDesk Research compared order book depth across major centralized exchanges on Jan. 1, 2025, Oct. 10, 2025, Jan. 1, 2026, and the current week. Market depth measures the dollar value of buy and sell orders placed near an asset’s current price. Greater depth generally allows larger transactions to occur without causing sharp price movements.

Bitcoin’s order book has grown deeper than it was on any of the three earlier comparison dates. On Oct. 7, around $11.7 million in orders were available within 1% of its market price, approximately 75% higher than on the crash date. The figure compares with about $9 million at the start of 2026 and $6.9 million in early 2025.

This increase suggests that market makers have committed more capital to Bitcoin trading. Since Bitcoin’s price remains roughly one-third below its pre-crash level, the improvement in dollar-denominated market depth cannot be attributed to a higher asset price alone.

Most of the additional liquidity sits close to Bitcoin’s current price, where market makers typically concentrate their orders. At a 5% distance from the market price, depth remains around $24 million, broadly matching the level recorded in January 2025.

Ether has shown a stronger recovery in several liquidity measures. Its order book depth within 0.5% of the current price has more than doubled since the crash to approximately $4.2 million. Within 1%, depth has climbed about 75% to roughly $5.3 million, exceeding levels seen at the beginning of 2025 and 2026.

CoinDesk Researcher Saksham Diwan said the deeper order books for Bitcoin and Ether reflect a genuine return of capital rather than an improvement driven solely by price changes.

However, this week’s market sell-off tested that recovery. Bitcoin’s liquidity within 1% of its price declined by approximately 12% between Oct. 7 and Oct. 8. Ether’s closest order book range also thinned slightly, although liquidity farther from its market price increased.

Altcoin liquidity continues to decline

Smaller cryptocurrencies have followed a different trajectory. CoinDesk Research’s altcoin basket recorded its highest dollar-denominated market depth on Jan. 1, 2025, with liquidity falling at each subsequent measurement point.

Altcoin order book depth within 5% of market prices has dropped by about one-third since early 2025 to approximately $2 million. Within a 1% range, depth has decreased by roughly one-sixth.

Liquidity measured in token units presents a more positive picture, having peaked on Jan. 1, 2026, before easing only slightly. However, analysts warn that this apparent stability largely reflects falling token prices, which hide the steady decline in capital supporting altcoin markets.

Spot trading volumes remain well below previous highs

Spot trading has also failed to recover fully. According to CoinDesk Research, weekly spot volume across centralized exchanges averaged around $279 billion during the four weeks leading up to Sept. 27. That was nearly two-thirds below the $801 billion recorded during the week of the October 2025 crash.

Trading activity reached its lowest point in August, when weekly volume fell to approximately $135 billion. Volumes have since doubled, but remain considerably below their levels around the crash.

Institutional demand strengthens the divide

The October 2025 crash drained liquidity from crypto markets within hours, raising questions about where capital would return once conditions stabilized.

CoinDesk Research lead Joshua de Vos said the recovery has primarily benefited Bitcoin and Ether. Market makers have rebuilt liquidity in both assets to levels above their pre-crash readings, while liquidity across the wider altcoin market continues to deteriorate.

De Vos expects this gap to remain in place into 2027, with only a handful of altcoins potentially avoiding the broader trend. Continued institutional preference for Bitcoin and Ether, along with trading activity increasingly concentrated in major cryptocurrencies, could further widen the liquidity divide across the market.