Liquidity is a measure of the degree to which an asset or security can be quickly bought or sold in the market without affecting the price. An asset class with high liquidity translates to less slippage during trading—the price offered during execution is likely to be very close to the market’s current bid-ask spread. Volatility and liquidity are challenges in the context of cryptocurrencies and digital assetsDigital assets are items of value that can be stored and traded electronically, including cryptocurrencies, tokens, smart contracts, and other... Read More. Low volatility makes it difficult to trade large amounts without moving the market significantly. High volatility can result in price swings, affecting the predictability of the market.
