Definition ∞ Cryptocurrency Liquidity refers to the degree to which a digital asset can be readily bought or sold in the market without causing a significant price fluctuation. High liquidity indicates a market with ample buyers and sellers, allowing for efficient execution of trades. Conversely, low liquidity suggests that large trades could substantially impact the asset’s price, making it harder to enter or exit positions swiftly. It is a crucial measure of market depth and stability.
Context ∞ Discussions concerning cryptocurrency liquidity are constant, particularly regarding major digital assets and newly launched tokens. Factors such as trading volume on exchanges, the presence of market makers, and the depth of order books are closely monitored. Low liquidity can exacerbate price volatility and pose risks for large investors and institutional participants, making it a key consideration in market analysis and asset valuation.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
