Lack of liquidity is a growing concern in crypto, says Auros' Jason Atkins

Core Insights - The primary issue facing crypto markets is a lack of liquidity, which hinders institutional investment despite demand [1][4] - Major deleveraging events have exacerbated the illiquidity, pushing traders out of the market faster than they can return [2][4] - The interplay between illiquidity and volatility creates a fragile market environment, deterring large institutional players from entering [4][5] Liquidity Challenges - Liquidity providers react to demand rather than create it, leading to reduced trading activity and increased volatility [3] - The thinness of the market results in a self-reinforcing cycle where illiquidity and volatility feed into each other, maintaining market fragility [4] Institutional Investment Dynamics - Institutions are unable to act as stabilizers in thin markets, which leaves no natural backstop during periods of stress [4] - Large allocators prioritize capital preservation over yield maximization, making them sensitive to liquidity risks [5][6] Market Comparisons - The notion that capital is simply rotating from crypto to artificial intelligence is challenged, as both are at different stages in their investment cycles [6]