BUY-SIDE LIQUIDITY IN CRYPTOCURRENCY MARKET TRADING

Hello to everyone in this wonderful community today. I greet you all in good spirit and I want to believe that we all are doing just great today and if so we give God the praise for the sustenance of life and good health.

I welcome you all to yet another beautiful day as this and I hope we all are good and in high spirits regarding the holiday and as we all know that tomorrow is Christmas so I want to use this time out to wish you all merry Christmas in advance.

You are all welcome to my blog again and today I will have to continue a session that I started few days ago regarding cryptocurrency market trading. If you glance through my last teaching I talked about an interesting topic titled sell-side liquidity in cryptocurrency market trading and we got to know what it entails through a well explained article that was written here by me.

For the sake of those who were not part of my last teaching I will have to give you a recap about what was done previously. I said that the sell-side liquidity is regarded as the assets that are readily available to be accessible by buyers in the market and at a given price depending on the rate of the seller who has provided such liquidity.

Today I will be going straight to the another interesting aspect of the cryptocurrency market trading as though it is the continuation of our previous lesson but today we will be looking at the Buy-side liquidity. So I urge you all to stay put and relax while I begin the discussion for today.

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As we all know the word liquidity is not a new term to us all and if you can recall I clearly defined the concept liquidity to us all for easy understanding and incorporation of the given topic but not withstanding I will have to define it one more time.

The term liquidity is regarded as a provision of an exchange for a particular commodity and commodity here refers to the asset in question. The reason why we can sell an asset in the cryptocurrency market trading is because of the presence of liquidity regarding the said asset.

This is why most investors and traders can sell of their assets and thus the trade does not really affect the price of the said asset and this is because of the liquidity regarding the asset.

Now we should all know that the demand of an asset increases the liquidity of the said asset. When there is a high demand of the asset, there would be enough liquidity for that asset and this will cause a rise in the asset price once demand is greater than supply. So liquidity is the total amount of all the order in the market whether limit or market order.

WHAT IS BUY-SIDE LIQUIDITY?

The Buy-side liquidity is said to be the liquidity that is generated or created when sell-stops are completed in the market. The buy side liquidity is mostly refer to as those traders and investors that are already in the market to accept assets that are being let off by other traders in the cryptocurrency market.

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The buy-side liquidity entails those traders that are readily available in the market to purchase digital asset and as such they provide liquidity regarding the asset through the constant purchase of the said asset whenever it is brought into the market to be sold.

This is the main reason why a trader can sell an asset and the trade does not necessarily affect the price of the asset because the buy-side liquidity is available in the market.

The buy-side liquidity helps to maintain the price of asset and this is very crucial especially in the cryptocurrency market trading.

When buy-side liquidity is lacking, the constant sell off of an asset will affect the price value of the asset in the market and that is why when ever a digital currency is released there must be liquidity regarding that asset and the buy-side liquidity must be present else the price of the digital currency will fall dramatically as no one would be available to purchase it.

The buy-side liquidity helps to maintain a constant equilibrium between supply and demand and this is why the buy-side liquidity is necessary in the cryptocurrency market trading.

As though these traders or investors are available to purchase assets in the cryptocurrency market trading and this is a way of investment through purchasing of the asset from those who are willing to sell at a given price and afterwards they sell it out to those who are willing to buy. That is the cycle of the buy-side and the sell-side liquidity in cryptocurrency market trading.

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CONCLUSION

To conclude my discussion for today. The buy-side and the sell-side liquidity both work hand in hand. If there is no one to buy an asset then there would be no buy-side liquidity and if there is no one to sell an asset then there would be no sell-side liquidity.

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In essence the buy-side liquidity foster the availability of liquidity regarding assets in the market so that when others are selling assets in the market, their duty is to purchase the assets in the market as this will provide a balance in the price value of an asset hence the asset will not be affected whenever there is a sell in the market and this is because the demand for the assets equates the supply of the said assets.

So the buy-side liquidity helps to maintain a stable price and causes no effect on the price value of the asset in the cryptocurrency market and as people are selling off, others are stacking up by purchasing the asset and providing liquidity through their purchase of the assets.

Thank you all for your time. The next phase of the buy-side asset will be discussed in our next meeting but for now goodbye.