Bryan
Bryan

Liquidity

Definition of liquidity

If you want to sell a certain crypto coin for fiat or a stablecoin and have your transaction not move the price, you need liquidity. In other words, liquidity is the degree to which a coin (or other asset) can be traded in the market at a price that is reflecting its current value. If you make a market order and you move the price of the coin significantly then there is little liquidity. The most liquid coin in crypto is Bitcoin with 25 – 30 billion of trading volume a day on average.

Examples of liquidity in a sentence

“I have a big bag of a token that I want to sell but I can’t get a good price because there is too little liquidity.”

“I prefer trading on Bitcoin because that is always liquid so I will never get stuck in a position.”

More info on liquidity

When you are an active trader you want to be aware of liquidity on the coin, token or asset that you are trading but also of the exchange or broker you are trading at. You want to trade something that has a high liquidity so you know that you will always be able to enter or exit a position. But liquidity on say Bitcoin is not the same on each exchange. Binance for example generally has over 1 billion of trading volume a day on the BTC/USDT pair while the Bittrex exchange only has around 2 million of trading volume in a day.

Bryan
Bryan

Bryan indulges in every bit of crypto-related news and material he can lay his hands on. As such, he often shares his views and advice through the onXRP content platform. He is a firm believer in crypto’s potential in the financial and economic world. With 5 years of experience in investing and trading Bryan brings excellent insights to the table. He is excited to bring much of this knowledge and many of his skills to the onXRP platform.