As Bitcoin’s price recovers from its March lows, nearing $28,900, concerns surrounding the liquidity crisis that caused the initial dip persist.
Liquidity, considered king in trading circles, refers to a market’s ability to facilitate the conversion between an asset and fiat currency. Poor liquidity can lead to market inefficiencies, causing traders to lose money due to thin order books, slippage, and larger spreads. This may also result in serious volatility, deterring investors from trading.