Bitcoin price action causes an increase in spread on low-tier exchanges

Bitcoin’s price suffered from immense selling pressure in the market on 10 May, causing the value of the coin to drop to $8,109. However, the tug of war between the buyers and sellers continued the following day. At press time, the BTC price has managed to reach $8,847.81 as the block reward halving was just 50 blocks away.

Source: BTC/USD on TradingView

Due to the turbulent spot market, there was a disparity noted on derivatives platforms of certain exchanges. Low tier exchanges like Bybit noted a surge not only in volume but also Open Interest [OI]. According to data provided by Skew, Bybit’s volume and OI reported an ATH.

Source: Skew

The volume recorded on 10 May was $4.2 billion, whereas the OI was at its peak of $313 million on 8 May.

Source: Skew

This surge in the price took place while BTC was on a fall, fueling trades resulting in increased activity. Bybit noted a reduced spread in $1 million, however, other smaller exchanges like bitFlyer noted a surge in its spread across $5 million B/O spread. According to Skew, the spread on bitFlyer and Deribit had increased post 12 March. But Deribit managed to create liquidity and its current spread stood at 1.50%, whereas bitFlyer remained illiquid and after recent price action, its spread stood at 3.08%.

However, Deribit and bitFlyer reported a great spike in the previously reducing $10 million B/O spread on 10 May.

Source: Skew

The spike took the spread higher to 16.87% on bitFlyer, while Deribit noted a rise to 9.98%. This reflected the reduced liquidity on the exchanges as other top-tier exchanges like Binance and BitMEX reflected a spread of under 1%. whereas the spread for FTX exchange remained at 1.27%.