Liquidity in cryptocurrency means the ease with which a digital currency or token can be converted to another digital asset or cash without impacting the price and vice-versa. Since liquidity is a measure of the outside demand and supply of an asset, a deep market with ample liquidity is an indication of a healthy market.
What are the two main measures of liquidity?
There are two main measures of liquidity: market liquidity and accounting liquidity. Market liquidity refers to the extent to which a market, such as a country’s stock market or a city’s real estate market, allows assets to be bought and sold at stable, transparent prices.
What is liquidity & why is it important?
Liquidity is a measure of the ease at which an asset can be converted to another asset without affecting its price. In simple terms, liquidity describes how quickly and easily an asset can be bought or sold. In this sense, good liquidity means that an asset can be quickly and easily bought or sold without having much effect on its price.
Why does a coin have low liquidity on coinlib?
A coin might appear to have potentially low liquidity on Coinlib because we might have not listed yet one or more exchanges that it is trading on. We do our best to keep adding new exchanges, however keep in mind that an exchange with low score will not contribute significantly to the liquidity of a given coin.
