The anonymity of blockchain is one of the factors that has led to a high growth rate of cryptocurrency. People feel safer when their transactions in a network are private. However, there’s one hurdle with anonymous blockchain, liquidity.
Blockchain Liquidity
In layman’s terms, Financial liquidity refers to how easily an asset (digital or physical) can be converted into cash without any effects on its market price. Assets with high liquidity are easy to convert to cash with fewer effects on market prices.
Unfortunately, despite a lot of efforts, cryptocurrencies still have one of the lowest liquidity among financial assets. This is the only market where the market price of an asset can drop over $1300 in 1.5 hours.
Such news affects the reputation of blockchain and leads to tightened regulations. The overall result is a crypto market with low liquidity, particularly for anonymous blockchain.