#Liquidity101
Why is liquidity important in the cryptocurrency market?
Let's take a closer look at the reasons why liquidity is essential in the cryptocurrency market. Here's what it does:
It maintains price stability
A liquid market is characterized by high trading activity, which brings balance between supply and demand. Thus, sharp price fluctuations are reduced.
It clarifies price determination
Thanks to stability, a liquid market provides the most accurate valuation. This helps in planning your personal investment strategy.
It prevents price manipulation
A liquid market is less susceptible to price control and manipulation by unscrupulous participants. This increases security when participating in the market.
Business activity analysis