Investment Opportunities, Risk Management, and Market Liquidity – Which Crypto Exchange Can You Trust?

Liquidity levels provide more valuable insights into trade execution quality and transaction costs and high liquidity can also provide investors with tighter spreads and lower slippage. 

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Traders chase liquidity and Bitfinex is where the whales swim. But why does liquidity matter to you? 

To the dismay of many, the past 12 months has seen a fairly average degree of volatility for cryptocurrencies, up 120%, down 50%, and repeat. Trading and investing in these market conditions demands an exchange with deep liquidity. 

Liquidity refers to how quickly an investment can be sold without negatively impacting its price. Investors and traders need to use an exchange with real liquidity (as opposed to the illusion of liquidity). 

Liquidity reflects the real situation of the platform.

Compared with trading volume indicators that can be easily faked, sophisticated investors prefer to choose ‘liquidity level’ as a stronger basis for measuring whether a trading platform is healthy. 

Liquidity levels provide more valuable insights into trade execution quality and transaction costs and high liquidity can also provide investors with tighter spreads and lower slippage. 

Compared with simply looking at trading volume, measuring the reliability of a trading platform through liquidity has some advantages: 

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SEE ALSO: ETH and BTC Held on Exchanges Decline Below 13% – The Lowest in History

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1. The trading volume may be driven by many small market makers 

For some cryptocurrency exchanges, volume may be driven by smaller market makers. If users simply observe the levels of trading volume on an exchange, they may be reading manipulated data. Liquidity is harder to fake, resulting in an authentic and reliable signal. 

2. Liquidity and execution price 

Sufficient liquidity means that you get the price you expect. Bids and asks come together and execute at the expected prices rather than paying more or getting less in a low liquidity environment. 

3. Leveraged risk of insufficient liquidity in futures trading 

The stakes go up in futures leveraged trading. Equally, the risks do too. It’s important to not overlook the risk of low liquidity, because a failure to exit at an exact price, on leverage, can multiply the losses of a failure to execute at the expected price.

Deep liquidity solves this potential problem. 

The Bitfinex Advantage 

Since the level of liquidity is so important, which trading platform on the market is more liquid? 

Bitfinex has, by far, the most liquid Bitcoin trading pairs, according to TheBlock’s study of the depth of dollar orders for:

  • Bitcoin
  • Ethereum and
  • Ripple

across 21 leading cryptocurrency exchanges. 

According to CoinGecko’s survey on the trading depth of the top 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 confidence in the authenticity of the trading volume returned. 

Additionally, Bitfinex will regulate the market by judging and adjusting the liquidity. Bitfinex has delisted more than 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. 

Lastly, a reliable exchange needs to stay online and operational during market stress. Many exchanges are known to crash or go offline when volumes increase or price moves fast. Bitfinex is known for its robust service during 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.

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RECOMMENDED READING: Crypto Exchanges Hold 6.6% of Bitcoin Supply – One of the Lowest in History

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