Secondary Market Liquidity

Definition ∞ Secondary market liquidity refers to the ease with which an asset can be bought or sold in the market after its initial issuance, without significantly affecting its price. High liquidity indicates that there are many buyers and sellers, allowing for quick transactions at fair prices. For digital assets, robust secondary market liquidity is essential for price discovery, investor confidence, and the overall health of the ecosystem. It reflects the efficiency and depth of trading activity.
Context ∞ Secondary market liquidity is a critical metric frequently analyzed in crypto news, particularly for newly launched tokens or less established digital assets. Low liquidity can lead to price manipulation and difficulty for investors to exit positions, whereas high liquidity generally indicates a mature and active market. Efforts to improve liquidity through various decentralized finance protocols and exchange mechanisms are ongoing.