Thin Order Book Liquidity describes a market condition characterized by a limited number of buy and sell orders at prices near the current market price. This indicates shallow market depth. Such a state makes asset prices highly susceptible to large and rapid fluctuations.
Context
Thin order book liquidity is a significant concern in cryptocurrency markets, particularly for less traded assets or during periods of market stress. News reports often attribute sudden price movements or substantial slippage during large trades to this condition. This underscores its impact on market efficiency and the potential for heightened volatility.
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