Friends who love to study can also combine this article with the theory of having a legitimate reason for learning that I mentioned earlier.
In a word, liquidity.
According to Zaiwen, liquidity refers to the ease, speed and degree of damage of converting an asset into a medium of transaction.
Simply put, liquidity refers to whether something is easy to buy or sell in the market, and whether trading is active. If it is easy to buy or sell, then liquidity is good.
The performance of liquidity can be divided into three dimensions: density, depth, and elasticity.
Density, in simple terms, refers to the density of orders placed. For example, for a target with a current market mid-price of 5 yuan, one exchange has a market price of 4.70, 4.80, 4.90, 5.00, 5.10, 5.20, and another has a market price of 4.97, 4.98, 4.99...5.03. Obviously, the density of the latter is higher. If you place a market price order, the transaction result will deviate very little from the mid-price. In addition to numbers, density is also related to the number of orders placed at each price.
Depth refers to the impact of large-scale transactions on the current market price. The smaller the impact, the better the depth. For example, if we take out 10,000 U and find an unpopular coin and throw it all in according to the market order, then this coin may be pulled up by 10% in one minute; but if the same 10,000 U is used to buy Bitcoin, Bitcoin will hardly react much, at most it will be slightly hard to show respect, which shows that the depth of Bitcoin is relatively much better.
This is a horizontal comparison between different targets. Vertically, we can compare the prices of pies in different periods. In the bull market, the market is very active. If we are generous, we can take out 500 pies, spot goods, and throw them in at the market price. The price may drop by 3 or 4 percent in an instant, or even less. But if it is the current market, if we throw in 500 pies, a 5% drop in an instant is basically not a problem, and this does not include the subsequent stampede. Similarly, the depth of the bull market is better than that of the bear market.
Elasticity refers to the speed at which price fluctuations caused by transactions converge to the equilibrium price. This also reflects the market's ability to respond to sudden large orders. Similarly, if we throw 500 large orders into the market at the market price, when liquidity is good, as all the orders for 500 orders are completed, the price will rebound quickly after a wave of decline, because there are many buyers waiting to buy goods below; when liquidity is poor, it will take a long time to rebound, which is reflected in the K-line, which is what we often call a painting gate.
The quality of fluidity is directly proportional to density, depth and elasticity.
In addition to some objective and accurate data, small investors can also easily feel the changes in liquidity in daily transactions and life.
In the bull market, whales are active, big V posts are constantly posted, and new leeks are everywhere... All of these contribute to the liquidity of the market. With abundant funds and good liquidity, all kinds of coins are thriving;
Nowadays, some big Vs are hiding, some are traveling, some are chatting, and there is often no movement in groups of all sizes for half a day. The silence of each account is draining liquidity from the market.
Just like a market, it is difficult to know the total turnover of the vendors in a certain day, but the number of people in the market can be seen at a glance.
The transition from bull to bear is hidden in the changes in liquidity. It is impossible for the market to go bullish before liquidity improves again.
Many people are guessing when the bull market will come, which, to put it bluntly, is when liquidity will improve.
——This requires a reversal of monetary policy, a change in everyone's expectations, and the promotion of good news; none of them can be missing.
