Definition ∞ Liquidity growth signifies an increase in the ease with which a digital asset can be bought or sold without significantly affecting its price. This typically involves a greater volume of assets available for trading on exchanges and within decentralized liquidity pools. Enhanced liquidity reduces slippage for large orders, improves price stability, and attracts more traders and investors to a particular asset or market. It indicates a healthier, more efficient market environment where transactions can be executed quickly and at fair prices.
Context ∞ Reports on liquidity growth are crucial for assessing the maturity and stability of digital asset markets, particularly for newer or smaller tokens. Increased liquidity often correlates with rising market confidence and broader investor participation. Conversely, a lack of liquidity can make assets volatile and difficult to trade, impacting market sentiment and perceived risk.
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