Definition ∞ Market Liquidity Thin describes a trading environment characterized by a low volume of available buy and sell orders, resulting in larger price movements for relatively small trades. In such conditions, assets are difficult to purchase or sell without significantly impacting their price. This state indicates a lack of depth in the order book, making the market more susceptible to volatility. It reflects reduced trading interest and capital allocation.
Context ∞ Crypto news often highlights Market Liquidity Thin periods, especially during weekends, holidays, or times of extreme market uncertainty, as these conditions can amplify price swings. A thin market can result in increased slippage for traders and greater difficulty for large institutional participants to execute orders without disruption. This situation poses a heightened risk for market manipulation and unexpected price action.
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