When evaluating spot exchanges based on order book depth, Bitfinex appears the most liquid

Evaluating exchanges by order book depth is far superior for traders rather than just looking at the trading volume. Following the Bitwise study, it’s now widely known that the vast majority of the reported trading volume is not real. In May, The Block’s research team analyzed 48 cryptocurrency exchanges and found that up to 86% of total reported trading volume is likely fake.

Order book depth is a much more indicative metric when evaluating different exchanges and a reasonable proxy to liquidity. Even though it can be faked as well, it’s much more challenging.

Looking at the entire order book would be impractical because it could give a false impression of liquidity due to extreme values. Different data providers use different portions of the order book — CoinGecko uses 2% while Coinpaprika uses 1% and 10%. CoinMarketCap doesn’t define their order book portion in their new liquidity metric. To put it simply though, order book depth analysis looks at the size of the open buy and sell orders within the section (1%, 2% or 10%) from the midpoint price.

In order to get an understanding of which spot exchanges have the deepest liquidity, The Block has analyzed the order book depth for BTC/USD(T), ETH/USD(T) and XRP/USD(T) trading pairs on 18 exchanges (Binance, Coinbase, Bitfinex, Kraken, Bitstamp, FTX, Liquid, Gemini, OKEx, CEX.IO, Huobi, Bithumb, itBit, Bittrex, Poloniex, KuCoin, bitFlyer and EXMO).

Bitcoin

Bitfinex has, by far, the most liquid Bitcoin pair with combined orders of $35.1 million; followed by Coinbase ($24.8M), Bitstamp ($21.8M), Kraken ($18.2M), FTX ($11.8M) and Binance ($10.1M). All other exchanges had pairs below $10 million in combined orders.

Source: Coinpaprika, The Block

Ethereum

Bitfinex has, again, the most liquid ETH pair with combined orders of $8.0 million; followed by Kraken ($6.0M) and Binance ($5.4M). All other exchanges are trailings significantly with combined orders of less than $3 million.

Source: Coinpaprika, The Block

XRP

Bitfinex has, once again, the most liquid XRP pair with combined orders of $4.3 million; followed by Binance ($3.5M). All other exchanges are trailings significantly with combined orders of less than $2 million.

Source: Coinpaprika, The Block

Combined

Even though the values above are just measured at a single point in time (on Dec. 6, 2019), they appear to be consistent with historical order book depth analysis. In short, Bitfinex, Coinbase, Kraken, Bitstamp, Binance, and FTX appear to have the deepest liquidity when it comes to BTC, ETH, and XRP. None of the other retail facing exchanges come close.

When looking at aggregate combined orders from all the evaluated exchanges, Bitcoin appears to be four times as liquid as Ethereum and more than 9 times as liquid as XRP.

Source: Coinpaprika, The Block