TVL, Order Book, Price Volatility

Title: Crypto complexities and impact on price volatility and TVL (total blocked value)

Introduction

The world of cryptocurrency has become more and more popular in recent years, many investors who crowd to explore their growth potential. However, an aspect that is often overlooked is the volatility of prices, which can have a significant impact on the value of cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and others. In this article, we will deepen in the complexities of the crypto, focusing in particular on TVL (total blocked value) and the dynamics of order books to understand how these factors influence price fluctuations.

What is the total blocked value (TVL)?

The total blocked value (TVL) refers to the total value of value that has been blocked in the decentralized financing protocol (Defi) of a cryptocurrency, such as a stablecoin or a dei lending platform. When users deposit funds in these protocols, they essentially block their assets and cannot withdraw until the blocking period expires. TVL is an important value for understanding the liquidity of a market.

How is the volatility of prices on the impact of the command card?

The control book plays a crucial role in shaping the dynamics of prices on cryptocurrency markets. An control book is a data structure that represents the offers and offers from all parties willing to buy or sell a certain asset at a given level. When there are several orders, it creates an imbalance of supply and demand, which can lead to significant price fluctuations.

In a market with a healthy control book, prices tend to be relatively stable, because buyers and sellers negotiate transactions. However, when the control book is unbalanced or the participants become extremely confident or bearing for a certain asset, prices may drop or rise. This is often referred to as a «book Squeeze».

Example: Recent Scale of Market in Bitcoin

In July 2022, the price of Bitcoin (BTC) decreased significantly, with an average decrease of over 20% per day for several days. At his peak, Bitcoin traded to about $ 48,000, but by July 31, he dropped to about $ 35,000.

A major contributor to this crisis was the imbalance of the Order Book in Ethereum (ETH). The price of ETH has been strongly influenced by the dynamics of supply and demand in the Ethereum network. On September 15, 2022, a large withdrawal event took place, causing an ETH flow in shifts and which led to significant decreases in the asset.

TVL impact on market volatility

The total blocked value (TVL) can have a significant impact on market volatility in several ways:

• Increased price sensitivity : When TVL is high, markets become more sensitive to changes in the dynamics of supply and demand. This can lead to rapid price fluctuations because traders adjust their positions accordingly.

• The amplification of the market capitalization : A large TVL on a certain asset can amplify the capitalization effects of the market, which makes the low price movements much more significant than they are.

• The distortion of the control book : The imbalances in the control card can distort the dynamics of prices and can lead to unexpected price movements.

Conclusion

The complex interaction between Crypto prices, TVL and order books create a fascinating and dynamic market environment. While a healthy TVL control card is essential for maintaining stable prices, an unbalanced control card or TVL high on a particular asset can create significant prices volatility.

In order to navigate in these complexities, investors must remain informed about the market dynamics, including changes in TVL and order book. Understanding how these factors influence each other, traders and investors can better anticipate potential price movements and make more informed decisions.

References

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• «How to work the total blocked value (TVL)» by Cryptoslate

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