What is liquidation and why is it necessary? ㅤ I decided to | CRYPTO TREYSI

What is liquidation and why is it necessary?
ㅤ
I decided to start one interesting section, in which I'm going to discuss popular crypto market terms. It will be useful for newbies. I decided to start with what we can't buy/sell our tokens without - liquidity.

In a nutshell, liquidity is the speed of transaction execution. If an asset has liquidity, then it has active buyers and sellers. When there is liquidity, we can make any coin transactions.

Liquidity is a market characteristic of an asset which shows how much it is in demand. The more an asset can be sold at market price (without reducing its value), the higher its liquidity.

What's wrong with not having enough liquidity?
We can't get out of position because no one wants our nickels. As a result, we hang on to the market. We become hostage to the situation.

Factors affecting liquidity:

The bigger the market, the more traders.
Thereby making it easier to find a buyer or seller of an asset. This is influenced by the popularity of the asset.

Number of trades on the market.
More trades = more traders = more orders = more liquidity.

Quality of the asset and its prospects.
If a project is actively developed, it has a goal and prospects, it gives reason to speculate.

Market structure and balance.
When market structure is efficient, it's easier for buyers and sellers to find each other and make deals.

Should I continue this section?

- YES
- NO

#Useful_terms

CRYPTO TREYSI | Subscribe