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[bytebulls]

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[kynaz]

In general terms, liquidity is the ease with which an asset or security can be converted into cash. Therefore, the concept of liquidity in cryptocurrency refers to a market’s ability to fulfill orders quickly and easily. For example, in a highly liquid market, a trader can buy or sell a large volume of cryptocurrency immediately, whereas, in an illiquid market, a trader may not be able to have their order filled in a timely manner. Therefore, it’s clear that traders are more likely to gravitate towards crypto exchanges with high liquidity. Higher the liquidity in an exchange fairer would be the price of a cryptocurrency.

Nowadays, more and more crypto exchanges strive to improve their liquidity. For example, The price discovery mechanism determines the liquidity of the exchange market. ByteBulls white label cryptocurrency exchange solution uses a network-wide shared order book with an automatic matching mode. All parties using ByteBulls white label cryptocurrency exchange solution have the order book shared by the whole network, which can greatly increase liquidity.

Liquidity is an essential attribute of any cryptocurrency exchange.

How do you think about this?

Generally in this regard. If any coin does not have liquidity, it will be very difficult for you to make a profit from that coin and certainly, the transaction will become more difficult so coins without liquidity will usually not be invested by investors care. For me, the trading volume is not as important as the liquidity because if the liquidity is high, the coin will automatically have good trading volume.

[Ryker1]

Well, this only means that the higher the volume of transactions in exchanges the higher liquidity must an exchange platform should because if not then transactions will not be smooth and slows down the movement in the market. surely with high liquidity yet in an off peak trading trading time may still get a flawless transaction. Indeed, we are not in control on the volume of exchanges or transactions then might as well platforms should do action on their liquidity for a flawless transaction even on peak.
Perhaps reading this from Medium blog will help you, https://medium.com/the-capital/why-is-liquidity-important-to-cryptocurrency-exchange-4a49c8d7d629.

[el kaka22]

It is not only the ease of converting it into anything, but also shows how much money is involved in that currency that you could trade and not destroy the whole market.

If you want to trade bitcoin to usdt for example there are billions going around, you could literally cash out 10 million dollars all at once and you may not disturb the market at all. However, there are so many small coins that lack that liquidity that if you end up selling only one thousand dollars you will literally destroy the price of that coin.

So, liquidity important in order to save the coin itself from all the traders. I got a coin for example back in the day that literally had 300 dollars per day trading, that is it just 300 dollars per day buying/selling. If I wanted to sell all my 1000 dollars worth of it, I would have to sell it for 30-40% lesser than what the market price was. If I did the same on any coin with higher liquidity it would have been fine.

[milewilda]

In general terms, liquidity is the ease with which an asset or security can be converted into cash. Therefore, the concept of liquidity in cryptocurrency refers to a market’s ability to fulfill orders quickly and easily. For example, in a highly liquid market, a trader can buy or sell a large volume of cryptocurrency immediately, whereas, in an illiquid market, a trader may not be able to have their order filled in a timely manner. Therefore, it’s clear that traders are more likely to gravitate towards crypto exchanges with high liquidity. Higher the liquidity in an exchange fairer would be the price of a cryptocurrency.

Nowadays, more and more crypto exchanges strive to improve their liquidity. For example, The price discovery mechanism determines the liquidity of the exchange market. ByteBulls white label cryptocurrency exchange solution uses a network-wide shared order book with an automatic matching mode. All parties using ByteBulls white label cryptocurrency exchange solution have the order book shared by the whole network, which can greatly increase liquidity.

Liquidity is an essential attribute of any cryptocurrency exchange.

How do you think about this?

Not to be an obvious thing but this one do side advertising Bytebull exchange solution.lol

Going back to the question about liquidity importance? Of course is one of the reason why people do jump in because orders made can be easily filled out due to high
activity between sellers and buyers and its just normal for people to always look for markets that have high liquidity since they do know that they can benefit out
specially this would really be good for active traders on where they do involved on dealing with price in a short span of time and earning from small percentages.

[LeGaulois]

@bytebulls

You should include a link to the source, otherwise, it could be easily considered as copy-pasting and if someone reports your post you will have a high chance to get your account banned.

You posted the same on Reddit, which is itself somehow paraphrasing content from Investopedia etc...

[adaseb]

The reason why bitcoin has very good liquidity especially with the derivative exchanges is because they are being paid to be a market maker. Generally its in a market makers best interest to do arbitrage against any other spot or derivative exchange they use. There are many periods when one exchange could differ in price alot against another exchange. One good example of this is the flash crash on Bitstamp a few days ago, if you filled those buys and sold them as a hedge on a futures exchange you could of made a very large profit with almost no risk.

There is risk however to this and its demonstrated what happened in March 13th when the market started to crash. Basically there was no buyers and nothing but huge long liquidations. If you bought on bitmex derivatives and sold on spot, you would be at a profit however you might of been liquidated unless you were over-collaterized. Why? Because when BTC goes down, so does the value of your margin. Hence you would need to do a very small leverage trade or send more BTC to your account to avoid getting liquidated. Because that day many market makers got liquidated.

[tvplus006]

...Liquidity is an essential attribute of any cryptocurrency exchange.
...

Recently, after Binance bought the Coinmarketcap rating, a new criterion appeared in the ranking of cryptocurrency exchanges - Liquidity. In the first place of this rating is Huobi Global, in the second place is Binance and closes the top three HitBTC. Very conveniently made, I have not seen this anywhere before.

[CryptopreneurBrainboss]

Exchange searching for liquidity is one of the reasons why they mostly list project that are having a large number of community since this will attract the community into patronizing their platform and in return bring about liquidity to the platform. You can observe this strategy been deployed by new exchange and most time this project are listed for free.

Few months back Kucoin (one of the previous strong top exchange contenders) listed Binance coin on their exchange for free irrespective of them having their own native token that was a competitor to BNB. That move not minding what negative effect it'll have on their native token was simply motivated by the need to hurt for more liquidity on their exchange since BNB was having a lot of trading volume (especially during that period that move was made).

No doubt liquid is very important as wthout liquidity, an exchange drops off the radar like in the case of bittrex, poloniex and the rest that were previously top exchanges but today can't compete with the new kids.

[kkofor]

...Liquidity is an essential attribute of any cryptocurrency exchange.
...

Recently, after Binance bought the Coinmarketcap rating, a new criterion appeared in the ranking of cryptocurrency exchanges - Liquidity. In the first place of this rating is Huobi Global, in the second place is Binance and closes the top three HitBTC. Very conveniently made, I have not seen this anywhere before.

I recognize that Huobi Global has much better liquidity than Binance, but in general, the difference is very small, so the ranking when referring to these two exchanges is not necessary. However, the liquidity exchanges are usually ranked very high, and the trading volume is fake, making me feel very disappointed. Of course, if CMC improves this issue, it will surely make investors feel safer.

[crwth]

The people who are quite new with the trading space would have a hard time learning these different kinds of terms. It's important to be understood if you are getting the basics, and this is just it. Liquidity is important when it comes to choosing an exchange. I would rather get my order filled fast instead of waiting for a long time just to get a trade to happen.

I use this advantage because I use a bot to trade for me, and I'm doing a market-making strategy and you cannot be profitable if it's not liquid enough or there's no volume. This is a term that could be useful to newbies as well.

[crwth]

Yes, exchanges with good liquidity can quickly process user orders. For newbie, it is important to trade on a liquid and safe exchange.

There are different factors that you could check to determine the liquidity of one trading pair inside the exchange.

• Check the Trading Volume
• Bid-Ask Spread

For the Trading Volume, you could easily check it at https://coinmarketcap.com

• Total Trading Volume of an Exchange
• Total Trading Volume of a Trading Pair
• Total Trading Volume of a Certain Coin

If the Total Volume of any of the above is high then it means that it has great liquidity.

Bid-Ask Spread on the other hand easily means that the price that a buyer is willing to buy that certain coin, is near to the price of what the seller wants. If these prices are close to each other, it has great liquidity

[bitgolden]

In simple terms, liquidity means how many people are participating in one particular exchange.

For example, if there are no adequate liquidity is happening then in order book will have one person to buy bitcoins at $10,000 and the next best price will be $10,050; it means there will be no trader available in between $10,000 and $10,050 to buy bitcoins.

Another familiar scenario is, you can see some scam coins will have no buyers but sellers alone could be found on order books. It means zero liquidity for buying for that particular coins regardless of how many people are trading at that exchange and trading other coins.

Liquidity is important for prices not jumping up and down. When there will be a strong bull or bear appears in market conditions then we can see prices to jump but without liquidity also prices will jump but that will destroy the fame of the exchange; that is the reason most exchanges are BUYING liquidity from some service providers and they do trade instead of the actual traders and the money involved will be separately settled down as per the agreement without the knowledge of the actual trader.

[DevilSlayer]

Liquidity is important especially for those aggressive type of traders, liquidity can be defined as getting in or out in a trade in a short period of time. If the market is illiquid, expect that the spread is too high. Spread is the difference between bid and asks. Illiquid exchanges are mostly have spread in crypto pairs that are too high so it is not easy to get in or out in a specific trade.

When I do trading, I usually popular exchange because of the liquidity and the volume. I previously experienced to burned out my portfolio because of the illiquid exchange that I used;  it is rrally hard for me to exit the trade especially because of the big volume that I recently have.

[electronicash]

this is also the reason why the dex are trying to come up with the liquidity pools. although the liquidity comes easily when the tokens listed on the exchange has demands, its just that the reputation of the exchange matters for traders and so we stick to the ones with already good trading volume exchanges.

Liquidity is important especially for those aggressive type of traders, liquidity can be defined as getting in or out in a trade in a short period of time. If the market is illiquid, expect that the spread is too high. Spread is the difference between bid and asks. Illiquid exchanges are mostly have spread in crypto pairs that are too high so it is not easy to get in or out in a specific trade.

When I do trading, I usually popular exchange because of the liquidity and the volume. I previously experienced to burned out my portfolio because of the illiquid exchange that I used;  it is rrally hard for me to exit the trade especially because of the big volume that I recently have.

picking a order will solve but then the price of course will not be worth. been there myself when selling a token.