Liquidity shifts represent alterations in the availability of buyers and sellers for a particular digital asset or within a specific market. These changes can occur rapidly due to market events, news, or shifts in investor sentiment, affecting the ease with which assets can be traded without significant price impact. A reduction in liquidity can lead to increased price volatility.
Context
Significant liquidity shifts are often observed during periods of heightened market uncertainty or following major announcements, such as regulatory actions or protocol upgrades. These movements can impact trading costs and execution prices, making them a critical factor for traders and portfolio managers. Monitoring liquidity dynamics provides insight into market depth and stability.
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