Token Liquidity

Definition ∞ Token liquidity denotes the ease with which a specific digital token can be bought or sold on exchanges without causing a significant price fluctuation. It is a measure of the market’s depth and the availability of willing buyers and sellers for that asset. High liquidity ensures efficient execution of trades and minimal price impact.
Context ∞ News reports frequently discuss token liquidity when analyzing market efficiency, trading volumes, and the overall health of digital asset markets. Low liquidity can present challenges for large investors and may increase susceptibility to market manipulation. Factors influencing token liquidity include trading pair availability and exchange listing prominence.