Non-highly liquid describes an asset or market that cannot be quickly converted into cash without a substantial loss in value or significant transaction costs. Such assets typically have fewer buyers and sellers, leading to wider bid-ask spreads and slower execution times. This characteristic indicates a reduced ability to exit or enter positions without affecting market prices. It represents a higher degree of market risk compared to liquid assets.
Context
In the digital asset space, many smaller altcoins, newly launched tokens, or illiquid decentralized finance pools are considered non-highly liquid, posing challenges for large investors or institutions. The lack of deep order books can lead to significant price slippage during trades, affecting overall market efficiency. News reports often highlight the risks associated with investing in non-highly liquid digital assets, emphasizing the need for caution and thorough due diligence.
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