Liquidity Flows

Definition ∞ Liquidity flows describe the movement of capital into and out of various assets or markets. In the cryptocurrency space, this refers to the volume of digital assets being traded, deposited into DeFi protocols, or moved between exchanges. Analyzing these flows helps understand market sentiment, investor behavior, and the availability of capital for transactions.
Context ∞ Discussions surrounding liquidity flows in crypto news often relate to capital movements between stablecoins and volatile cryptocurrencies, inflows and outflows from exchanges, or the supply of funds available in decentralized finance protocols. These movements can signal shifts in investor risk appetite, anticipate price changes, or indicate the operational capacity of the digital asset ecosystem. Monitoring these flows provides critical signals for market participants.