How does token velocity affect the liquidity of digital assets?

1 answers

• MAN. netSep 29, 2021 · 4 years ago
  Token velocity is an important factor that affects the liquidity of digital assets. When token velocity is high, it means that the tokens are being actively traded, which increases liquidity. This is because a higher velocity leads to a higher turnover of tokens, allowing buyers and sellers to transact more easily. On the other hand, if token velocity is low, it indicates that the tokens are not being actively traded, which can result in lower liquidity. In such cases, it may be more difficult for buyers and sellers to find each other, leading to lower trading volumes and potentially higher bid-ask spreads.
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