Liquidity indicates how easy it is to buy or sell a particular currency. The higher the liquidity with a particular currency the easier a coin can be bought or sold, the lower the liquidity the more difficult.

What determines whether a market is liquid?

There are three main indicators that show whether a market is liquid (whether there is enough liquidity):

  • The 24-hour trading volume This indicates how much of a coin was traded in 24 hours. If this is only $10,000, this is a bad sign.
  • The order book on the major exchanges Here you can see all the buy and sell orders.
  • The buy-sell spread This is the difference between the asking price and the offer price. If the difference is large, liquidity is likely to be low.