Crypto market depth has almost fully recovered and is back to its pre-FTX average reports crypto research firm Kaiko.

A major decrease in market liquidity that persisted after the shutdown of FTX and Alameda Research in November 2022 has now recovered to pre-collapse levels, according to crypto research firm Kaiko.

In a March 18 research bulletin, Kaiko data shows that the liquidity gap, dubbed the “Alameda Gap,”  recovered to pre-FTX levels last week due in part to a recent Bitcoin rally.

Kaiko coined the term “Alameda gap” in November 2022 due to the firm’s role as a large market maker. It refers to a drop in liquidity on global exchanges caused by huge losses incurred by market makers.

The collapse caused a substantial decline in available trading liquidity, affecting volumes and market stability, which highlighted the influence of major players in crypto markets in 2022.

In its recent note, Kaiko noted the gap persisted for more than a year “as market makers waited on the sidelines for sentiment and trading activity to recover.”

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However, Kaiko said that as of last week, Bitcoin’s 2% market depth is up by 40% year-to-date and briefly surpassed its pre-FTX average of $470 million.

“As of last week, market depth has almost fully recovered and is back to its pre-FTX average,” it noted.

The firm attributed this to the surge in BTC prices which have gained 60% since the beginning of this year and notched a new all-time high of $73,750 on March 14.

Meanwhile, Kaiko also reported that BTC/USD spreads on three major exchanges available in the U.S. — Coinbase, Kraken, and Bitstamp — have also declined, “suggesting liquidity conditions are meaningfully improving.”

The change in spreads could partly be due to structural reasons, it noted before concluding that the cost of trading in the United States is now much cheaper. A spread is the difference between the asking price and the bidding price of an asset.

Earlier this month, reported that Bitcoin could face a “sell-side liquidity crisis” later this year if institutional ETF inflows continue.

However, daily ETF inflows have slowed considerably over the past few days, dropping below $200 million from highs of above $500 million and a $1 billion daily inflow record last week when BTC hit an all-time high.