Bitfinex is the most liquid spot exchange based on order book depth

Evaluating exchanges by liquidity is far superior for traders rather than just looking at the trading volume. Higher liquidity gives traders tighter spreads and lower slippage. 

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 Research 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%, Coinpaprika uses 1% and 10% while CoinMarketCap doesn’t define their order book portion in their new liquidity metric. 

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 USD pairs for Bitcoin, Ethereum and XRP on 21 exchanges (Binance, Coinbase, Bitfinex, Kraken, Bitstamp, FTX, Liquid, Binance US, Gemini, OKEx, Okcoin, CEX.IO, Huobi, Huobi Korea, Bithumb, itBit, Bittrex, Poloniex, KuCoin, bitFlyer, and BTSE).

Bitcoin

Bitfinex has, by far, the most liquid Bitcoin pair with combined orders of $60 million; followed by Coinbase ($28.9M), Kraken ($26.9M), Bitstamp ($20.7M), and FTX ($11.9M). 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 $12.6 million but the gap between the second most liquid pair isn’t as wide as for Bitcoin. Bitfinex is followed by Binance ($11.5M), Coinbase ($6.9M), and Kraken ($5.6M). All other exchanges are trailings significantly with combined orders of less than $4 million.

Source: Coinpaprika, The Block

XRP

Coinbase has the most liquid XRP pair with combined orders of $2.9 million; followed by Binance ($2.6M), Bitfinex ($2.5M), Kraken ($2.2M), and Bitstamp ($2.1M). 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 Apr. 9, 2020), they are consistent with The Block’s order book depth analysis in early December 2019. In short, Bitfinex appears to be the most liquid exchange. Coinbase, Kraken, Bitstamp, and Binance appear to have the deepest liquidity when it comes to BTC, ETH, and XRP. No other exchanges come close.

When looking at aggregate combined orders from all the evaluated exchanges, Bitcoin appears to be three times as liquid as Ethereum and more than 11 times as liquid as XRP.

Source: Coinpaprika, The Block