What impact does the availability of free float shares have on the liquidity of cryptocurrencies?

1 answers

• Hemanjali PadibandlaFeb 10, 2025 · 5 months ago
  The availability of free float shares has a significant impact on the liquidity of cryptocurrencies. Free float shares refer to the shares that are available for trading in the market, excluding those held by insiders or restricted from trading. When there is a high availability of free float shares, it means that there are more shares available for trading, which increases the liquidity of the market. This is because more shares in circulation provide more opportunities for buyers and sellers to transact, leading to higher trading volumes and tighter bid-ask spreads. On the other hand, if there is a low availability of free float shares, it can lead to lower liquidity in the market. This means that there may be fewer shares available for trading, resulting in lower trading volumes and wider bid-ask spreads. Lower liquidity can make it more difficult for traders to buy or sell cryptocurrencies at desired prices, and it can also increase the risk of price manipulation. Therefore, the availability of free float shares is an important factor to consider when assessing the liquidity of cryptocurrencies.
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