Low-Liquidity Token

Definition ∞ A low-liquidity token is a digital asset that experiences limited trading activity and low trading volume on exchanges. This characteristic means that large buy or sell orders can significantly impact its price, leading to high price volatility and potentially large price discrepancies. Low liquidity can make it difficult for holders to execute trades quickly without affecting the market price. Such tokens often pose higher risks for investors due to price instability and limited exit options.
Context ∞ Crypto news often features discussions about low-liquidity tokens, particularly in the context of new or smaller projects, or those with niche utility. Reports may warn investors about the risks associated with illiquid assets, including price manipulation and slippage during trades. Regulatory concerns about market integrity often address the challenges posed by low-liquidity tokens, emphasizing the need for transparent market data and investor awareness.