Market Liquidity

Definition ∞ Market liquidity refers to the ease with which an asset can be bought or sold in the market without significantly affecting its price. High liquidity means assets can be traded quickly with minimal price impact, while low liquidity implies greater difficulty in executing trades without causing substantial price shifts. It is a critical factor for market stability and efficiency.
Context ∞ News about market liquidity in the crypto space often focuses on the depth of order books on exchanges, the availability of buyers and sellers, and the potential for price manipulation in less liquid markets. Reports may highlight concerns about liquidity drying up during periods of stress, impacting the ability to exit positions and potentially exacerbating price declines.