Investment Opportunities, Risk Management & Market Liquidity – Which Crypto Exchange Can You Trust?
Traders chase liquidity and Bitfinex is where the whales swim. But why is liquidity important to you?
To the dismay of many, the last 12 months have seen a fairly average degree of volatility for cryptocurrencies, up 120%, down 50%, and on repeat. Trading and investing in these market conditions requires an exchange with deep liquidity.
Liquidity refers to how quickly an investment can be sold without negatively impacting its price. Investors and traders should use an exchange with real liquidity (as opposed to the illusion of liquidity).
Liquidity reflects the real situation of the platform.
Compared to trading volume indicators that can be easily faked, sophisticated investors prefer to choose “liquidity level” as a more solid basis for measuring whether a trading platform is sound.
Liquidity levels provide more valuable insight into the quality of trade execution and transaction costs, and high liquidity can also provide investors with tighter spreads and lower slippage.
Compared to simply looking at trading volume, measuring the reliability of a trading platform through liquidity has some advantages:
SEE ALSO: ETH and BTC held on exchanges drop below 13% – Lowest in history
1. Trading volume can be driven by many small market makers
For some cryptocurrency exchanges, volume can be pulled by smaller market makers. If users are simply observing trading volume levels on an exchange, they may be reading manipulated data. Liquidity is more difficult to simulate, which gives an authentic and reliable signal.
2. Liquidity and execution price
Sufficient liquidity means you get the price you expect. Bids and asks come together and execute at expected prices rather than paying more or getting less in a low liquidity environment.
3. Risk of insufficient liquidity leverage in futures transactions
The stakes increase in leveraged futures. Likewise, the risks too. It is important not to overlook the risk of low liquidity, as a failure to exit at an exact price, on leverage, can multiply the losses from a failure to execute at the expected price.
Abundant liquidity solves this potential problem.
The Bitfinex Advantage
Since the level of liquidity is so important, which trading platform in the market is the most liquid?
Bitfinex has, by far, the most liquid bitcoin trading pairsaccording to TheBlock’s Dollar Order Depth Study for:
- Ethereum and
on 21 major cryptocurrency exchanges.
According to CoinGekco’s survey of the trading depth of major exchanges, in terms of top assets and tail assets, Bitfinex has the greatest trading depth.
According to the latest data from CoinMarketCap, there are nearly 400 high-quality trading pairs, ranking eighth in its comprehensive score for ranking exchanges based on traffic, liquidity, trading volume, and trust. in the authenticity of the returned trading volume.
Additionally, Bitfinex will regulate the market by judging and adjusting liquidity. Bitfinex delisted over 100 low liquidity trading pairs this year and introduced many trading pairs with high liquidity and trading potential. Through continuous self-regulation and innovation, Bitfinex continues to provide investors with a safer investment environment.
Finally, a reliable exchange must remain online and operational during market stress. Many exchanges are known to crash or disconnect when volumes increase or prices move quickly. Bitfinex is known for its robust service in all market environments.
This is why Bitfinex is the number one choice for professional crypto investors in Africa:
- Industry leading liquidity
- Excellent trading depth
- High Quality Asset Trading Pairs
Bitfinex has always been committed to providing a high-quality investment environment for global cryptocurrency investors.
RECOMMENDED READING: Crypto exchanges hold 6.6% of Bitcoin supply – one of the lowest in history
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