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Find the Way to Solve Liquidity Problems at The Conference. Exchanges

Ellie Suen   Feb 03, 2020 16:00 2 Min Read


Find the way to solve the liquidity problems at The Conference. Exchanges


One of the most important parameters for any asset is its liquidity. After all, if you can’t realize the asset - it’s virtually worthless. And despite all the effort, cryptocurrency today cannot compete with fiat money in terms of liquidity.

How to assess liquidity

Basically, the lower the volatility of the coin is - the higher is its liquidity as a single trade has less effect on its price. It can be considered a function of coin popularity on the exchange as well as of the number and volume of trades.

Cryptocurrency  liquidity problem

Low liquidity coins are not protected against manipulations such as Pump&Dump schemes - every large trade affects their price dramatically. When liquidity is high, investors are much more confident, which insures influx of money, improvement of technology, increase in both trading volumes and the exchange rate and so on. But as we all know, any crypto is quite volatile - so low coin liquidity is a common issue on the market.

What Affects Liquidity 

Exchange availability. Basically, without access to exchanges, cryptocurrency cannot have any liquidity to speak of. New coins, which are not traded on major exchanges, have extremely low liquidity. But if the coin is listed on major exchange - this indicator skyrockets.

Adoption. Another important factor is the ability to pay in a coin in question. If the coin is used a lot to purchase goods or services - it will be popular and will have high liquidity.

Legal status. Regulators all over the world still cannot come to a unified position on cryptocurrencies. In many countries, like Switzerland, Canada or Germany, the use of crypto is allowed and even encouraged. Some countries, like the USA, assumed a neutral stance, some banned crypto outright, some, like China, alternate between cracking down and encouragement. Final position of “fence-sitting” countries can dramatically affect the crypto market liquidity.. 

Public awareness. Obviously, people who do not know about crypto, do not use it. 

The Conference. Exchanges which will take place in Amsterdam on March, 5, will bring together all key market participants - traders, exchanges, regulators, and liquidity providers - to discuss a multitude of the most pressing issues of the market. And liquidity problem is one of them. Basically, all market issues, from fake trading volume to regulators’ stance affect liquidity, so it is a handy indicator of the crypto community combined work. If you want to take part in the conference as a liquidity provider - contact us and join The Conference. Exchanges and let’s make our industry better together.


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