How Crypto Market Liquidity Actually Works
Crypto traders would often blame “low liquidity” after a bad fill, but only a few understand what liquidity really is, why it disappears, and how a bad fill actually happens.
Liquidity affects how easily you can buy and sell assets at fair prices. The depth of the crypto market liquidity varies across different exchanges, assets, and trading pairs. Binance is rated the most liquid exchange by trading volume. Bitcoin is considered the most liquid crypto asset, and the BTC/USDT pair is more liquid compared to BTC/USD.
A $100K-$1M market sell could move the price of a low-cap altcoin by 5% or more, but barely noticeable on BTC. That’s a function of liquidity.
But liquidity is not static or fixed. It comes and goes…
