Market imbalance occurs when there is a significant disparity between buying and selling pressure for a digital asset. This situation arises when the volume of buy orders substantially exceeds sell orders, or vice versa, leading to rapid price movements. It can be caused by large institutional trades, sudden news events, or algorithmic trading strategies. Such imbalances can result in increased volatility and reduced liquidity.
Context
Crypto news often highlights market imbalances as drivers of significant price fluctuations, particularly in less liquid altcoins. Traders and analysts closely monitor order books and trading volumes to identify these conditions. Understanding market imbalance is crucial for assessing short-term price direction and the overall health of a digital asset’s trading environment.
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