Why is it important to remember liquidity? ⠀ In three words, | Crypto | Bitcoin | Ethereum | Altcoin | News

Why is it important to remember liquidity?
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In three words, liquidity is the speed of transactions. When there is liquidity, we can make any transactions with coins.

Liquidity is a market characteristic of an asset showing its demand. The more assets can be sold at market price (without reducing its value), the higher its liquidity.

But if it is not there, we become an aperitif for the sharks. They will milk us while we try to sell the coins of weak projects.

What's wrong when liquidity is lacking?
We can't get out of a position because no one wants our shiat. As a result, we stay further waiting in the market. We become hostage to the situation that ordinary people have put us in.

Factors affecting liquidity

Bigger market, more traders.
Thus it will be easier to find a buyer or seller for an asset. This is influenced by the popularity of the asset, including the media part of the project, the media component of its creators and the PR management of the project team.

Number of trades on the market
More trades = more traders = more orders = more liquidity

The quality of the asset and its prospects
If a project is run by competent people, it has specific goals and prospects for further fruitful development in the future. This gives reason for speculation in the cryptocurrency market.

Market structure and balance sheet
When the market structure is efficient, it is easier for buyers and sellers to find each other and close deals.

Do you ever get the feeling that even with in-depth analysis, there is no way you can read the market?

- NO
- YES

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