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  • Writer's pictureGlobal MoonXBT

Liquidity

The term liquidity is used to define the ability to sell or buy an asset without causing big impacts in the market price. It is also related to the idea of how easy it is to convert an asset to fiat currency. Properties or assets that are difficult to convert to cash are not liquid, while the ones that can be exchanged right away are deemed as a liquid asset.


Markets are considered liquid when a trader or investor can promptly sell or buy a particular asset, meaning that there is always a counterpart willing to trade. In contrast, a market that is not considered liquid would require the trader to wait much longer until his order is finally executed.


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