The ability to convert assets into cash is known as Liquidity. Because of the high level of liquidity of money, it is said to be the standard measure of liquidity. If you have money on your hand, you will be able of investing, buying and facing immediate economic aspects and necessities. Liquidity provides better market stability; Fast transaction ability and it makes equality for the participants in terms of price. This context consists of the facts that affect liquidity.
Trading Volume
This is the key factor that affects liquidity in the cryptocurrency domain. Trading volume refers to the number of coins that have been traded within the last 24 hours. This can be studied by any cryptocurrency market-cap ranking website. If the traders have performed many trading activities within the previous 24 hours it means the trading volume is high. In simple terms higher trading volume; Higher liquidity level.
Cryptocurrency Exchanges
A cryptocurrency exchange platform is a place where traders can freely complete their trading activities between the buyer and seller. The number of cryptocurrency exchanges states a better market. The rapid growth of the frequency and volume of trading of the crypto-exchange marketplace helps the liquidity to be increased. In the present scenario, there are about 300 crypto-exchanges and about 21 peer-to-peer exchanges. More simply, More crypto exchanges; More Liquidity!
Acceptance
Global acceptance offers higher liquidity. As Cryptocurrencies are accepting by world-wide merchants and businessmen the trading increases. Nowadays, there are more than 370,000 vendors who accept cryptocurrencies across 182 countries. Especially, Amazon, Microsoft, Apple, PayPal, and eBay are the world’s top businesses that have accept cryptocurrency. The higher adoption and acceptance create higher liquidity.
Rules and Regulations
Though it is better to have legal coverage, some countries have banned cryptocurrency under certain rules and regulations. Some countries have allowed under certain terms and conditions. In such regions, the liquidity of this specified field becomes low at a considerable rate. But as the acceptance becomes more flexible the future will be powered with more flexible rules and regulations with a legal background.
