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What is Liquidity?

In the context of cryptocurrencies, liquidity refers to how quickly a digital currency or token may be exchanged for cash or another digital asset without affecting its price. A deep market with plenty of liquidity is a sign of a healthy market since liquidity is a measure of the external demand and supply of an asset.

Additionally, all else being equal, a cryptocurrency or digital asset should be more stable and less volatile the more liquidity it is accessible.


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