Does the Asset's Liquidity (E.g. BTC Vs. an Altcoin) Affect the Minimum RFQ Size? ▴ Learn

Does the Asset’s Liquidity (E.g. BTC Vs. an Altcoin) Affect the Minimum RFQ Size?

Yes, the asset's liquidity significantly affects the minimum Request for Quote (RFQ) size. Highly liquid assets like BTC typically allow for smaller minimum RFQ sizes because market makers can easily hedge and offload the risk.

Less liquid altcoins carry higher execution risk, forcing market makers to demand a larger minimum size to justify the risk and potential price impact. This larger size helps ensure the trade is worth the effort and risk management.

What Is ‘Slippage’ and How Is It Magnified by the Wider Spreads Found in Illiquid Altcoin Markets?

What Is the Concept of ‘Tick Size’ and How Does It Limit Spread Narrowing?

What Is the Risk of Holding an Option on a Highly Illiquid Altcoin?

How Does the ‘Tick Size’ of an Asset Affect the Profitability of Latency Arbitrage?