Guys, when trading primexbt crypto, how do I recognize liquidity in the market?

asked by Diego M. on 8/20/24

2 Answers
Thumbnail of user samuelh1468

When it's about liquidity then you will understand it by the tightness of spreads, because the market gets denser, there are many buyers and sellers. You can also use volumes analysis, there are special liquidity zones where are many buyers and sellers.
Plus, you can also check relative strength index, that indicates if the asset is oversold or overbought.
In general, there are many methods and all of them can be applied at primexbt, actually.

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Thumbnail of user emilianor20

That is actually an amazing question. Sure people know that BTC is the #1 crypto, and ETH is #2. But beyond that, how to know? Is SOL better than BNB in terms of liquidity? Is AVAX bigger than DOT or smth?
You can look at market caps of each currency, that tells you something. But it doesn't really show liquidity, since liquidity = stuff currently in the market. High mcap cryptos often have like 30-50% dedicated to founders/long term hodlers, which don't really contribute liquidity as much.
Staking is one thing to see liquidity imo. You can look at total amount of currency staked. It is direct liquidity, and ETH is amazing in that, ever since they transitioned to PoS.
Also you can just check trading volume, although its not direct liquidity, but correlation is very strong there.
And OFC the main source is spreads. If spreads are very narrow, you know liquidity is high. Same as it works for EUR/USD, it does for crypto assets as well. PrimeXBT has such low spreads, you know they are drowning in $$.

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