"Liquidity involves the trade-off between the price at which an asset can be sold, and how quickly it can be sold. In a liquid market, the trade-off is mild: one can sell quickly without having to accept a significantly lower price. In a relatively illiquid market, an asset must be discounted in order to sell quickly."Source
1- Factors that influences crypto market
2- Crypto Investment
3- Risk management in crypto
4- Trading Plan
So, talking about those factors that influences crypto market are
1- 1. MARKET STRENGTH
Market strength is to the overall health and resilience of a market, indicating its ability to withstand various pressures and challenges while maintaining stability and growth
A- MARKET CAPITALIZATION
The total value of all assets(MONEY) traded in the market, often used as a measure of the market's size and significance. Crypto market will be healthy despite attacks if only the people that trade the Market are much cos when people start removing their money from the market it will reduce the strength of the market which will now lead to most coin going down and many people might lose their money
B- TRADING VOLUME
The total amount of resources or assets traded and flown into the market at a specific period, indicating the level participation, activity and liquidity within a particular market
There is a huge justification and difference between the definition of market capitalization and trading volume
There are many other factors but I will stop there at the major ones, let's now move to volatility
There are many other factors but I will stop there at the major ones, let's now move to volatility for easy fathoming
2- VOLATILITY
Volatility means the rate at which crypto prices changes over time, The price of a coin can change within a short time. For example, there was a time I gave my past students about a coin that they should buy it and the price of the coin was at $2 but some of them actually delayed and within some hours the coin has risen to $100... the ability of crypto coin price to change cos there is no specific time for the change in price. It can increase suddenly and it can also decrease suddenly
I hope we now understand volatility with the above explanation
LET'S MOVE TO HOW MAKE MONEY IN CRYPTO MARKET
But before we talk about that I want to quickly discuss about liquidity which is also one of the terminologies on crypto
LIQUIDITY
we can just say liquidity means the easiness to which to which we can buy or sell a coin we can say a market has high liquidity it means the quantity of participation trading a coin either buy or sell and this affects how high or low a coin could be. A high liquidity could increase the coin and on the other hand a low liquidity means that the people trading the coin or in the market not quite much and it might decrease the the value or price
Source
Liquidity in cryptocurrency is the quantity of the ease to which one can convert digital coins into fiat cash or another asset within the market.
It makes it quite easier for traders to sell off their holdings. Moreover, it promotes price stability and lowers the rate of price volatility.
Low trading volume is a vital signal of liquidity risk and liquidation in cryptocurrency.
Generally, when a digital asset has a low trading volume and very few investors, it is associated with high volatility due to high volume poured in it
Individuals can use the sell and buying values and spread together with the trading volume to measure a digital asset’s liquidity.
High liquidity gives traders to analyse a digital asset’s value with good derivatives.
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