“Black Swan” Author Points to Decreased Bitcoin Liquidity as Red Flag for Investors

Nassim Nicholas Taleb, the acclaimed author of “The Black Swan,” has raised concerns about the sustainability of Bitcoin’s recent rally, pointing to a severe drop in liquidity as a potential red flag for investors. 

Despite the cryptocurrency’s impressive double-digit gains this year, Taleb’s analysis suggests that the market may be on shaky ground, with liquidity levels in crypto markets hitting a 10-month low.

The decline in liquidity has been exacerbated by recent banking fears, with US exchanges hit the hardest due to the closure of USD payment rails and crypto banks. Market makers in the region are facing unprecedented challenges to their operations. Spreads for USD pairs have displayed a similar trend, suffering increased volatility as a result of uncertainty in the US. 

Taleb has been a vocal critic of cryptocurrencies in the past, frequently highlighting what he perceives as inherent flaws in the crypto concept. In an earlier tweet, Taleb scoffed at a headline reporting a drop in Bitcoin’s price due to uncertainty, arguing that it contradicted claims that the cryptocurrency is “antifragile.” 

The author has also expressed gratitude for the messages he’s received from individuals who claim he saved them from investing in Bitcoin, which they believe would have led to significant losses.

Despite Bitcoin’s current price surge, Taleb’s warning about the decreasing liquidity suggests that investors should remain cautious.