The liquidity levels of any crypto trading platform is one of the most important considerations for them to explore before depositing the funds and beginning trading, with the reason for this being that highly cruelty trading platforms often allow for advantages such as lower slippage and optimal entry and exit points as a result of this.
For hire trading volumes or for prolonged periods of trading on a platform, this can have a huge impact on the overall profitability of trading activities, and for example of the course of a year's worth of trading a difference of a few percent in slippage can add up to become a significant amount by the end of the year.
What taking a look at which crypto trading platforms have the most liquidity in 2021, starting with a look at exactly why having higher liquidity is so advantageous for crypto traders and why they consider this to be such an important metric to understand, before moving on to look at which crypto trading platforms have the most liquidity in 2021.
Why is High Liquidity Beneficial to Crypto Traders?
Better Exit and Entry Points
High liquidity across trading pairs and markets refers to a crypto exchange having high levels of cash on hand to back the shares they broker or sell to traders, the amount of liquidity an exchange has is often one of the metrics considered by users when considering the trust and credibility of a crypto exchange.
Good entry points are the cherries atop profitable trades but exit points not only require the profits to be considered but losses too, planning exit points and being able to quickly liquidate holdings is vital to any risk-management strategy, no matter the investment size, and high liquidity is great for investors.
Crypto liquidity can be thought of as asset/market or exchange liquidity; asset liquidity is a function of buyers/sellers of an asset and the ease at which it is accessed, exchange liquidity involves makers/takers on the platform and its supported pairs, market liquidity is a combination of both of those put together.
While most investors are spending their time considering fundamentals and technical analysis most negate the importance of strategies that involve the assessment of exchange market liquidities, the volume and frequency of trades an investor opens or closes should be made on sites they can entrust with their coins and assets and those with high liquidity provide better entry/exit-point opportunities.
Shows the Platform is Large and Professional
The greater exchange liquidity becomes the greater its reputation and security measures in place usually become and this is especially true today where exchanges are responsible for processing and securing average daily trading volumes of over a billion dollars which most of the top platforms process each day.
As with most companies and brands in life we tend to give greater trust to those that have large client bases with years of presence in their given industry and this concept is one every-day consumers carried over to the crypto-trading sector, from one crypto forum to the next, people contrast liquidity to health.
Saying the word ‘health’ is speaking of the liquidity directly and the liquidity is important as the greater it is the more stable it becomes as when buying or selling a cryptocurrency there is always another user on the other side to fill the order, the greater the exchange liquidity is, the less trades influence prices.
There are more crypto exchanges around today than ever before and each are competing for the users that now pushed global cryptocurrency market caps past $1.7 trillion at the time of writing, each has its unique features and tools but ensuring it has high liquidity is a ‘must’ before choosing one to trade on.
Low Slippage Means High Profits
Crypto is volatile, even the largest coin by market cap is not immune to the swings of other asset types, such volatility can cause slippage for traders which refers to when the price of opened positions changes by the time it executes, and a series of these can lead to great losses when large positions are opened.
Most exchanges are still in their early stages of growth though some, like Binance and Coinbase, have more years than some with credible reputations and higher liquidity, exchanges with not enough may have problems processing and fulfilling orders and especially the ones that are made in large quantities.
Closing a position on a platform lacking the liquidity to cover it will cause the order to be distributed across many smaller orders at higher costs for each instead of for one single price, technical architecture is another cause of slippage too, poor-performing platforms can have latency in pricing and movements.
Delays in trading executions, whether it be deposits or withdrawals or the opening/closing of positions, slippage can be detrimental to investor bankrolls and cause unnecessary loss to profits, that said, it is in the interest of retail traders and investors to choose an exchange known for its speed and performance.
Some Platforms Have Much Higher Liquidity Than the Rest
All crypto-trading platforms are unique and that holds true to the features they offer and support they deliver users to much more in between, though one thing remains most prominent of them all and that is the liquidity they have and the market credibility they have established with the customers they serve.
Trading volumes and market caps were once the sole indicators of an established and healthy exchange though the liquidity a platform often becomes subconsciously dismissed in the back of trader minds, not all platforms are equal and that holds true for the liquidities they have which range from one to another.
The increase in the number of trusted crypto exchanges will provide the opportunity for more people to invest in crypto and this increased frequency and volume is what drives the liquidity these markets have, some choose to store crypto off exchanges but as they transfer them to be sold will add liquidity too.
Liquidity and its concept greatly influence the prices of all coins and one way to define it is by the ease and ability at which crypto can be converted to cash on-demand, some can take the angle of liquidity being the bid-ask spread, orders at lower bid-ask prices have higher liquidity and it is important to keep in mind that the amount a platform has can vary significantly from one to the next, choose yours wisely.
Which Crypto Platforms Have the Most Liquidity in 2021?
PrimeXBT
In the space of only a few short years PrimeXBT has grown rapidly to become the world's largest multi-asset margin trading platform and as a result today PrimeXBT manages up to $7 billion of global trade each and every day.
With this much liquidity passing through PrimeXBT it means that all trading players pairs on the platform have minimal slippage and excellent entry and exit points, with PrimeXBT being one of the most optimal platforms to use for trading cryptocurrencies or even for trading traditional assets like stock indices, forex pairs, and commodities.
As well as this, PrimeXBT partners with 12 separate liquidity providers in order to ensure that the platform has high trade volumes and liquidity across all pairs and that even large traders and investors are able to make optimal trades on the platform as well as a result of the significant amount of liquidity present.
Binance
Binance is a highly popular and mainstream crypto-trading platform designed for both beginner and experienced traders wanting access to a range of trading tools suited for all market conditions, only launched four years ago, they quickly rose to prominence to be the largest platform just a year later.
This crypto exchange supports traders in many countries around the world who transact over a hundred billion dollars per day in transactions on the site, the closing/opening of positions are done with ease and users enjoy many supported funding sources that range from debit/credit cards to even cryptos.
Binance is a well-known crypto-trading platform and reputed in related forums and communities across the net but it is no surprise given its ‘King of Crypto’ status and two-thousand supported coin selection, they have processed over $2 trillion in trades and have continually innovated to improve their platform.
Aside from their customer support and fast transactions that their users commonly bolster about they have also become known for incredibly low rates, Binance users are able to close and open positions at 0.1% trade rates and if doing so using Binance Coin, their inherent coin, can reduce the cost even more.
Coinbase
Coinbase was founded in 2012 with the goal to make crypto-investing accessible to all and so they did when they released nearly a decade ago became headlining news that captured the attention of many people and investors from around the world, they are now arguably the most popular of any exchange.
This exchange is a notable one indeed with having high FDIC-issued coverage and high liquidity across trading pairs which is thanks to its global user base of retail and professional traders that soon will be reaching forty million, it is one of the most trafficked and traded-on exchanges and has great credibility.
Coinbase underwent tremendous transformations in terms of design and functionality since launching a near ten years ago and have even added a more sophisticated platform known as Coinbase Pro which is geared for experienced traders requiring specialized trading tools and financial products to trade with.
As newbie-friendly to those approaching crypto as an investment for the first time they are a great site for first-time traders as well though if sophistication is what you fancy and your experience is that of an expert their Coinbase Pro platform will not disappoint, check them out as they have tools for all users.
In Conclusion
Liquidity is one of the most important considerations for any trader or investor that regularly makes trades on a crypto trading platform, and is important for them to understand exactly how much liquidity there is and whether it is spread across all trading pairs that they would plan to use as well.
While there are many crypto trading platforms at the top the market that have multibillion-dollar liquidity on their platforms, many crypto trading platforms that may look good on the outside only have relatively small amounts liquidity and this is sub optimal for professional traders who are avoiding slippage by seeking high liquidity platforms.
To learn more about each of the three highest liquidity platforms in the crypto market we have selected, check out PrimeXBT, Binance, and Coinbase.