One Can Potentially Buy The Second Largest Cryptocurrency In The Market With 15% Discount
This is not the first time Uniswap has faced liquidity issues. Recently, the WETH trading pair dropped to $950 despite the average Ether market cap being above $1,000. The main reason behind this is the lack of liquidity on Uniswap due to its decentralized nature.
According to Dex Screener, Uniswap V3 WETH/USDT price once dropped to $845.911 at 17:27（UTC+8） and is now back to normal. There are large investors who exchanged 1,292ETH for 1,092,907USDT in this trading pair. https://t.co/Y5a79iYdxX— Wu Blockchain (@WuBlockchain) 15 June 2022
Liquidity on the trading pair is being provided by other users who receive rewards for it. The process of market creation is handled by the AMM system. Unfortunately, it sometimes fails to meet the current demand coming from large investors.
Some cryptocurrency whales use the lack of liquidity to their advantage by lowering the price of the wrapped asset as compared to what the market is offering and then purchasing the asset at a steep discount, which is nearly impossible to do on large centralized exchanges such as Binance. Is.
Unfortunately, lack of liquidity is not a good thing if one sells or buys large amounts of coins or tokens for a long period of time, rather than speculative or price manipulation. The swapped $1.1 million was most likely not used to reduce the price of an asset, but to fund a loan or short a position.
At press time, Ethereum is trading at $1,110 and bounced off the $1000 range, which could push the price to dive 10%. Earlier, U.Today noted that Ethereum has a strong base for a short-term reversal going by technical indicators.