Member-only story
The Ultimate Guide to trade Bitcoin and digital Assets
In the following story, my intention is to acquaint you with my book and delve into certain key topics within it that serve as invaluable resources for enriching your understanding of crypto assets and trading.
The text begins with a fundamental financial concept that is essential to grasp before engaging in any type of investment: “liquidity risk” and how it is directly related to the “market manipulation risk.” Cryptocurrency exchanges are influenced by supply and demand dynamics, and liquidity risk can have a significant impact on asset prices and investment returns. In cryptocurrency markets, the presence of institutional traders, who typically help make markets more liquid and less susceptible to manipulation by large speculators, is limited.
A universally accepted definition in the financial community describes liquidity risk as “the risk of not being able to sell (or liquidate) an investment quickly and at a reasonable price.” This can happen, especially with newly issued or low-liquidity cryptos, which can get stuck or delisted due to insufficient trading activity. Market liquidity is, therefore, a crucial aspect, even though it is often taken for granted. This is particularly true in cryptocurrency markets where liquidity…
