What are the risks of investing in highly illiquid cryptocurrencies?

3 answers

• Krabbe HayNov 10, 2022 · 3 years ago
  Investing in highly illiquid cryptocurrencies can be risky due to the lack of market depth and liquidity. Illiquid cryptocurrencies often have low trading volumes, which means that it can be difficult to buy or sell them at desired prices. This can lead to price manipulation and increased volatility, making it harder to accurately assess the value of these assets. Additionally, illiquid cryptocurrencies are more susceptible to pump and dump schemes, where the price is artificially inflated and then dumped by a group of investors. These schemes can result in significant losses for unsuspecting investors.
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• madixJul 17, 2025 · 6 days ago
  When investing in highly illiquid cryptocurrencies, one of the main risks is the potential for price manipulation. With low trading volumes, it becomes easier for a small group of investors to influence the price of the cryptocurrency. This can lead to sudden price spikes or crashes, making it difficult to make informed investment decisions. Furthermore, illiquid cryptocurrencies may also have limited utility and adoption, which can affect their long-term value. It's important to carefully research and consider the liquidity and market dynamics of a cryptocurrency before investing.
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• SosoApr 25, 2021 · 4 years ago
  Investing in highly illiquid cryptocurrencies carries significant risks. These cryptocurrencies often have low trading volumes and limited market depth, which can result in wide bid-ask spreads and slippage when buying or selling. Additionally, illiquid cryptocurrencies are more prone to price manipulation and pump and dump schemes. It's crucial to be aware of these risks and to carefully consider the liquidity and trading volume of a cryptocurrency before investing. At BYDFi, we prioritize providing our users with access to a wide range of liquid cryptocurrencies to mitigate these risks.
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