Ether’s 5% market depth on U.S. exchanges has dropped by 20% since the introduction of spot ether ETFs in the U.S.

Poor market conditions and seasonality effects are to be blamed, according to CCData.

Exchange-traded funds (ETFs) will be net positive for market liquidity, making it easier to execute large buy and sell orders at stable prices. That’s what CoinDesk reported in December 2023, before the ETFs were approved in the U.S.

The liquidity boost materialized well enough in the bitcoin (BTC) market following the debut of spot ETFs on Jan. 11. With ether (ETH), however, the story played out differently. Ether’s order book liquidity has declined since the July 23 debut of nine ETFs, according to data tracked by London-based CCData.

Since the ETFs’ introduction, the average 5% market depth for ETH pairs on U.S.-based centralized exchanges has declined by 20% to roughly $14 million. On offshore centralized venues, it’s dropped by 19% to around $10 million. In other words, it’s actually now easier to move the spot price by 5% in either direction, a sign of reduced liquidity and increased sensitivity to large orders.

“Although the market liquidity for ETH pairs on centralized exchanges remains greater than what was at the beginning of the year, the liquidity has dropped by nearly 45% since its peak in June,” Jacob Joseph, a research analyst at CCData, told CoinDesk in an interview. “This is likely due to the poor market conditions and the seasonality effects in the summer, often accompanied by lower trading activity.”

The measure refers to the amount of buy and sell orders within 5% of the mid-market price for an asset. Greater depth indicates strong liquidity and lower slippage costs. CCData considered the 5% market depth for all ETH pairs on 30 centralized exchanges.

Ether ETFs have witnessed a cumulative outflow of over $500 million since July 23, according to data tracked by Farside Investors. Ether’s price has declined by over 25% to $2,380, CoinDesk data show.