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How Does the Bid-Offer Spread Relate to Market Liquidity in Cryptocurrency Exchanges?

Narrow spread equals high liquidity; wide spread equals low liquidity.
Greeks.Live11.11.25

How Does the Bid-Offer Spread Relate to Market Liquidity in Cryptocurrency Exchanges?

A smaller bid-offer spread in a crypto exchange typically signifies higher market liquidity. High liquidity means there are many buyers and sellers, allowing large orders to be executed quickly without significantly impacting the price.

A wide spread, conversely, indicates low liquidity, making it harder to execute trades at favorable prices and increasing the risk of slippage.

What Is the Role of a Market Maker in Narrowing the Bid-Ask Spread?
What Is the Impact of a Large Order Book on the Bid-Offer Spread?
Why Is the Bid-Ask Spread a Major Risk Factor for Box Spreads in Illiquid Crypto Markets?
Why Do Stablecoins Typically Have a Very Narrow Bid-Offer Spread?

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