Hi guys, this is Lucky Ali, and welcome back to my new post. Also, visit my previous post. We often see price predictions, charts, and analysis, as well as fundamental market insights, and there is one thing behind them all: liquidity. Projects can collapse, traders lose confidence, and the market can stall due to a lack of one thing: liquidity. So now you can understand how important liquidity is.
If you don't know what the work of liquidity then just understand one thing that it is all about making buy-sell smooth without a big price difference. You know you can even get paid by providing liquidity, and there are lots of liquidity pools available. Here I want to give you an example, just imagine there is a small pond and a big dam or lake. You can notice ripples when you throw a rock in a small pond, but this is not going to happen with the big lake or dam. why? because there is more water in the big lake. Compare more water with more liquidity, and then everything will be clear in your mind. Large liquidity means absorbing large trades easily, so that it can not even make a difference in price.
You should have the freedom to exit from any token of crypto, and that freedom is provided by liquidity, because when there is liquidity, you can sell your token instantly, and at the same time, you can buy any token instantly. Everything should be done at a fair price. That is painful to find buyers or sellers, and that pain is unbearable, but thanks to liquidity. Do you know? Institutional investors choose big coins like Ethereum and Bitcoin because of higher liquidity, and they can easily exit from such coins because these coins are big with higher liquidity. Bitcoin is the king, and Ethereum is the queen.
Building healthy liquidity for the token is extremely important because this thing builds trust among the investors. Because investors do not want to be trapped in any project that is why they see liquidity. Liquidity pools are helpful to generate more liquidity. Healthy liquidity is precious for any token, and it should be free from ghost liquidity. One more thing is that liquidity can control volatility, so that if there is more liquidity in the token, volatility can be in control.
If I say, in short, liquidity is the backbone of the market. Traders can participate easily because of liquidity. Price chart and analysis are okay, but understanding liquidity is even more important it is beyond any analysis. So this is the information and the discussion regarding liquidity in the market. Do you have something to say? Please share in comments. Share this post on social media and reblog. Have a good day.
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| Hi I am lucky ali from gujarat, india. I am a crypto enthusiast, blogger, and SEO developer. You can find me on hive, twitter and discord (Lucky Ali#6343). Sharing is caring. Thank you, hive family ♥ |
