The bid/offer spread is the difference between an asset’s bid price and ask price. This spread can be used as a measure of liquidity.
- A small spread indicates higher liquidity as there are more market participants.
- A larger spread indicates smaller liquidity and lesser market participants.
As the market turmoil continues due to potential insolvencies and liquidations, this has caused bid/offer spreads to WIDEN across multiple exchanges as market participants become hesitant to buy/sell — reducing the assets’ liquidity.
The bid/offer spreads for BTC and ETH are widening to new highs.
This will likely continue until market sentiment improves and market participants re-enter.