Definition ∞ In traditional finance, a high liquidity stock refers to shares of a company that can be bought or sold quickly without significantly affecting its price. While “stock” is not a native crypto term, the concept of high liquidity is highly relevant to digital assets. A digital asset with high liquidity can be traded efficiently on exchanges, indicating robust market depth and minimal slippage. This characteristic is vital for large institutional participants and active traders.
Context ∞ Crypto news often discusses the liquidity of various digital assets, especially when comparing trading pairs on different exchanges. High liquidity is a critical factor for institutional adoption, as it permits large trades without excessive price impact. Concerns about insufficient liquidity can deter major investors and contribute to market volatility. Future market structures aim to aggregate liquidity across decentralized and centralized platforms to enhance overall market efficiency.
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