Liquidity In The Crypto Market #004

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Hello great minds,

It is a wonderful opportunity to come before you all today to discuss on an issue of great importance in the cryptospace.

I trust you are all doing perfectly fine and are enjoying your activities in the community.

Today, we shall continue our Interesting discussion on liquidity in the cryptomarket.

In our last discussion, we learnt how liquidity aids easy buying and selling in the cryptomarket but there are some stones we left unturned which I'd love us to consider right now.

Please continue this journey with me as we examine interesting ways in which liquidity aids buying and selling in the cryptomarket.

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HOW LIQUIDITY AIDS BUYING AND SELLING IN THE CRYPTOMARKET

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• MARKET DEPTH:

Another interesting way in which liquidity affects buying and selling is in terms of market depth.

Liquidity is greatly reflected in market depth which helps displaying the number of buy orders at different levels.

The market depth is most times displayed in a graphical format which is popularly known as the order book.

And the order book shows the number of contacts and shares available at each price level.

One Importance of the market depth is that it helps in providing traders with vital information on the current state of the market.

It also helps traders to guage the market activity and and spot strong support and resistance levels in the market, and this in turn helps them make good trading decision.

• ACCESSIBILITY:

High liquidity in the market attracts different types of traders into the market, traders ranging from retail investors into institutional traders.

This diversity plays a big role in ensuring the availability of counterparties for buying of a commodity, thus guaranteeing that there are sellers in the market willing to sell to the buyers.

• MARKET CONFIDENCE:

Another way in which liquidity aids buying in the market is by building market confidence in the mind of the buyers.

When traders have this trust in the market that they can easily and safely buy any commodity at any time and moment in the market, it builds confidence in them, thus attracting other potential buyers into the market.

And by doing so, it increases market participants for that commodity in the market.

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CONCLUSION

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Liquidity is indeed a very broad topic and it is very important in the cryptomarket.

I will try my best to touch the major aspect of liquidity in the market.

Please I encourage you to follow me gradually as we learn a lot about liquidity in the market.