Crypto Market Liquidity

Definition ∞ Crypto market liquidity describes how easily a digital asset can be bought or sold without significantly affecting its price. This metric reflects the depth and activity of trading pairs on exchanges, indicating the ease with which large orders can be executed. High liquidity implies a stable market with minimal slippage, benefiting traders and institutional participants. Conversely, low liquidity can lead to abrupt price movements and increased trading costs.
Context ∞ Crypto market liquidity is a constant focus in digital asset news, especially concerning market health, trading conditions, and institutional adoption. Sudden shifts in liquidity can signal impending volatility or market stress, influencing trading strategies and risk assessments. Reports often analyze liquidity across various exchanges and asset classes to gauge overall market stability and investor confidence.