How Can Regulatory Clarity Impact the Perceived Liquidity of a Crypto Derivative?
Clear regulation provides legal certainty, which encourages institutional investors and large financial entities to participate. Increased institutional participation brings significant capital, leading to higher trading volume and deeper order books.
This enhanced activity improves perceived liquidity, lowers risk premiums, and ultimately tightens the bid-offer spread on derivatives.
Glossar
Perceived Liquidity
Assessment ⎊ Perceived Liquidity, within cryptocurrency, options, and derivatives, represents a subjective evaluation of the ease with which an asset can be bought or sold without causing a significant price impact.
Regulatory Clarity Impact
Impact ⎊ Regulatory Clarity Impact refers to the measurable effect that definitive, well-defined governmental rules and guidelines have on the structure and activity of the cryptocurrency derivatives market.