Auros: Crypto illiquidity, not volatility, keeps Wall Street sidelined
Jason Atkins, chief commercial officer at crypto market maker Auros, warned that poor market liquidity — not volatility — is the principal barrier preventing large institutional investors from entering crypto. Speaking ahead of Consensus in Hong Kong, Atkins said thin order books and episodic sell-offs (citing the October 10 crash) mean markets cannot absorb substantial institutional flows without severe price disruption. Market makers have shifted from generating demand to fulfilling it; reduced trading activity prompts tighter risk limits, increasing volatility and further shrinking liquidity in a reinforcing cycle. Atkins argued institutions need capital-preservation safeguards and room to execute large trades safely; volatility in thin markets makes hedging and liquidation difficult. He also dismissed claims that capital is migrating en masse from crypto to AI, saying the two sectors are at different development stages. The warning underscores that growing institutional interest alone won’t bring Wall Street participation unless market depth and liquidity provision improve.
Bearish
Atkins’ warning highlights structural liquidity weakness. Thin order books and constrained market-making capacity mean large orders can cause outsized price moves — a direct negative for market stability and for institutions that require predictable execution. Historically, episodes of low liquidity (for example during major crypto sell-offs in 2018 and 2022) preceded sharp price declines and elevated spreads, discouraging big-ticket participation. Short-term, this news can increase risk premia: wider spreads, deeper pullbacks on large sell orders, and reduced leverage tolerance. Traders may expect higher volatility during flow events and lower intraday depth, favoring smaller-cap, high-turnover strategies or hedged trades. Long-term, unless liquidity provision improves (via ETF adoption, dedicated FMIs, larger market-making capital, or more on-chain/depth solutions), institutional entry will remain limited, capping sustained upward price pressure and potentially reducing market resilience. Overall, the piece signals increased execution risk and a cautious institutional outlook — conditions typically bearish for broad market momentum.