#Liquidity101 What is the liquidity of cryptocurrencies?

In general, cryptocurrencies have high liquidity due to the large trading volume, 24 hours a day, in different markets simultaneously. The 20 largest cryptocurrencies by market value, for example, have a daily volume above US$6,998,846,574,020 million.

On the other hand, when analyzing cryptocurrencies outside the top 100, especially those not listed on major exchanges, it is common to find projects with low liquidity. This problem is even more evident on decentralized exchanges (DEX).

The differential of cryptocurrencies is the ability to trade even on weekends and holidays, making cash conversion practical and immediate. Regardless of liquidity, the investor should analyze the trading history and risk before defining the ideal allocation in cryptocurrencies, according to their risk appetite.

How to plan the liquidity of a portfolio?

To plan the liquidity of a portfolio, it is essential to ensure that part of the investments is in assets with a liquidity of, at most, 1 business day, such as DI funds or CDBs with immediate redemption. This ensures quick access to cash for emergencies.

The rest of the portfolio should be allocated according to the risk profile and the investor's objectives, allowing for the pursuit of higher returns in assets with lower liquidity, such as stocks or real estate.