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The scarcity of cryptocurrency liquidity becoming a serious concern

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Shivangi Mujumdar Follow


Apr, 26 2021

Apr, 26 2021

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Cryptocurrency Liquidity makes an essential element for any market. Cash scrapping does create an imbalance within the environment, and critical factors of the business start slump the track. This is often again to not say that the asset price wouldn't oscillate whatsoever. On the opposite hand, the worth variations are advantageous at the end of the day for higher returns. There is, otherwise, no point in the presence of those tradable assets. 


The liquidity problems on current cryptocurrency exchanges 


Ever since cryptocurrency trading began, the liquidity problem has been pulled along. With the cryptocurrency gaining popularity, many have already tried their hands raising their cryptocurrency exchange. It's understood that not all businesses are often of the exact fine nature. One will differ from another, hence various trading volumes. As a result, the liquidity of every exchange varies. 


Blaming it all on the exchange, well, wouldn't be the proper thing. Out of 1700+ digital currencies, not even one has the proficiency to win potential traders or investors. Hence, the 'currency listing' chosen by exchanges makes a nosedive to upkeep or generate accurate liquidity. There've been some news flashes where a couple of main exchanges remove tokens that fail to supply proper liquidity on the business. 


What should cryptocurrency exchanges now neutralize to beat this liquidity issue? 


Exchanges are advised to revise tons to upkeep liquidity on their platforms. Firstly, they have to be favorable enough to lure traders and investors, banks and institutional people, who then can partake in trading, so maintaining the liquidity on the platform. Cryptocurrency Exchange service providers must perform an in-depth research report to determine which currencies need to be added to the listing and which don't. This is often, in fact, an attempt to satisfy the primary point. As you would possibly know, not every currency is attractive and suitable for traders. Out of plenty, only a couple matters to a majority. Being an exchange owner, the person must foresee the longer term of the currency then make it a neighborhood. 

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Shivangi Mujumdar

CBW - External Analyst


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