Fragmented Liquidity refers to the situation where the total trading volume and available capital for a specific digital asset are distributed across numerous, disconnected exchanges and trading venues. This dispersion results in thinner order books and varying prices across different platforms. It can complicate large trades and hinder efficient price discovery.
Context
Crypto news often addresses fragmented liquidity as a persistent challenge in the digital asset markets. This condition can lead to increased slippage for traders and create arbitrage opportunities across different platforms. Efforts to consolidate liquidity or create cross-exchange trading solutions are frequently reported as market participants seek greater efficiency.
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