Trader Series, Cognitive Enhancement and Learning Methodology Series (8)

Market Liquidity

Liquidity is often simply understood as the ease of buying and selling assets, or the ability to swiftly execute large orders close to market prices.

But on a deeper level, liquidity is actually one of the most deceptive characteristics in the market. It is a property that is overlooked when present and only valued when absent.

Liquidity is like oxygen; we hardly feel its presence when it is abundant, but once it is scarce, it becomes a matter of life and death.

Liquidity reflects the confidence of market participants and their willingness to bear risk. When market panic occurs, liquidity not only decreases but may suddenly evaporate; this phenomenon reflects a sudden reset of market consensus and a sharp shift in risk appetite.

Understanding liquidity means recognizing that today’s seemingly high-liquidity market may hide deep vulnerabilities.

Market liquidity often changes non-linearly; in specific market conditions, liquidity can become the most expensive commodity, far exceeding the value of the assets themselves.

#BTC走势分析 What is the latest market trend? Bitcoin rises while altcoins crash, altcoins rise, Bitcoin consolidates, funds can only flow in one place, which is a manifestation of a lack of liquidity.