How does off-book trading impact the liquidity of digital currencies?

1 answers

• patrick lacunaJun 08, 2025 · 2 months ago
  Off-book trading can have a significant impact on the liquidity of digital currencies. When trades are conducted off-book, they are not reflected in the order books of exchanges, which can lead to a decrease in overall liquidity. This is because off-book trades are not visible to other market participants, making it harder for buyers and sellers to find each other. As a result, the bid-ask spread may widen, making it more expensive to buy or sell digital currencies. Additionally, off-book trading can introduce more price volatility as large trades can be executed without impacting the market. Overall, off-book trading can reduce liquidity and increase market inefficiencies in the digital currency market.
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