Definition ∞ Reduced liquidity signifies a market condition where there are fewer buyers and sellers readily available to trade an asset. This results in wider bid-ask spreads and makes it more difficult to execute large trades without significantly impacting the asset’s price. It indicates a diminished capacity for swift conversion of assets into cash.
Context ∞ Reduced liquidity is a recurring theme in discussions about specific digital assets or entire market segments, often linked to periods of heightened volatility or regulatory uncertainty. Analysts closely monitor liquidity metrics to gauge market health and potential trading risks.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
