Andrei Grachev: Separation of Liquidity Growth and Participant Numbers
Andrei Grachev pointed out that liquidity in financial markets will eventually grow, but the number of traders and investors will fluctuate.
Sometimes there is a large sale to the public, and sometimes a large sale to a few institutions; the scale may be similar, but the methods are completely different.
At the market level, liquidity expansion does not rely on a linear increase in the number of participants; institutional concentrated trading and retail large-scale sales form two paths, with capital switching between institutional and retail channels at different stages, and strategy differences determining execution costs and impacts.
Source: Public Information
ABAB AI Insight
Andrei Grachev, an active trader at the intersection of digital assets and traditional finance, has long observed changes in market structure; his views emphasize the asynchrony between liquidity and participant numbers, echoing the recent phenomenon of alternating institutional capital entry and retail cycles.
On the capital path, market-making and sales teams switch client structures based on stages, motivated by matching current liquidity sources; this is specifically manifested in expanding retail channels during periods of retail activity and focusing on large orders and OTC during institutional-led periods to maintain stable transaction volumes.
Similar cases can be seen in the transition from retail-driven markets in 2020-2021 to institution-driven ETF markets after 2023, or the differences between primary and secondary sales in traditional bond markets; the current financial market is transitioning from a phase of reliance on a single channel to a phase of flexible switching among multiple client structures.
Essentially, this is a reconstruction of capital paths: when liquidity can come from different entities, market mechanisms redefine sales efficiency using client structures rather than merely numbers, concentrating pricing power among participants who can flexibly switch channels.
ABAB News · Law of Cognition
Liquidity growth does not depend on the growth of numbers
Selling to the public and selling to institutions are two different businesses
Same scale, method determines the outcome