Short-term market friction describes temporary impediments or inefficiencies that hinder smooth price discovery and asset movement within a market. This can include sudden liquidity shortages, order book imbalances, or rapid shifts in sentiment that cause temporary price dislocations. Such friction typically resolves quickly but can present opportunities or risks for traders. It reflects transient market conditions.
Context
News reports often attribute sudden price movements or volatility to short-term market friction, especially in fast-paced cryptocurrency markets. Discussions frequently analyze the impact of these temporary disruptions on trading strategies. Understanding market friction helps explain rapid, unpredicted price changes.
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