What are the factors that determine a good bid-ask spread in the cryptocurrency market?

1 answers

• Adithya ReddyNov 14, 2022 · 3 years ago
  In the cryptocurrency market, the bid-ask spread is influenced by a variety of factors. One of the main factors is the level of competition among market makers. When there are more market makers competing to provide liquidity, the bid-ask spread tends to be narrower. Another factor is the overall market conditions. During periods of high volatility or low liquidity, the spread can widen as market makers adjust their prices to account for the increased risk. Additionally, the type of cryptocurrency being traded can also impact the spread. Less popular or less liquid cryptocurrencies may have wider spreads compared to more popular ones. Traders should consider these factors when evaluating the bid-ask spread to ensure they are getting the best possible prices for their trades.
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