Definition ∞ Deeper liquidity represents a market condition characterized by a greater volume of buy and sell orders for a digital asset, allowing large transactions to occur with minimal price impact. This signifies a robust and efficient market where assets can be readily converted to cash without significant value loss. Increased liquidity generally leads to tighter bid-ask spreads and improved trading efficiency.
Context ∞ News reports often reference deeper liquidity as an indicator of a market’s health and its capacity to absorb large trades. It is a critical factor for institutional investors considering market entry, as it reduces execution risk. The ongoing pursuit of deeper liquidity across various digital asset exchanges remains a key discussion point in market development.
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