What Is Liquidity?

Liquidity is a measure of the ease at which an asset can be converted to another asset without affecting its price. In simple terms, liquidity describes how quickly and easily an asset can be bought or sold.

On the other hand, if you’d like to buy $100 USD of APT on the APT/USDT pair on the Bitmart Exchange, you’ll be able to do it almost instantly without any impact on price. This is why liquidity is important when it comes to financial assets.

Cash (or cash equivalents) can be considered the most liquid asset since it can be easily converted into other assets. A similar asset in the world of cryptocurrencies is a stablecoin.

While stablecoins and digital currencies aren’t part of the standard for everyday payments yet, it’s only a matter of time until they are widely accepted. In any case, much of the volume in the cryptocurrency market is already done in stablecoins, making them very liquid.

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