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How Is Market Cap Used to Assess the Liquidity of a Crypto Asset?

Higher market cap suggests a larger asset with potentially higher trading volume and deeper liquidity, reducing slippage.
Greeks.Live17.11.25

How Is Market Cap Used to Assess the Liquidity of a Crypto Asset?

Market capitalization is an imperfect but useful proxy for assessing liquidity. A higher market cap generally suggests a larger, more established asset with greater trading volume and deeper liquidity pools.

This means large trades are less likely to cause significant price slippage. However, trading volume is a more direct measure of liquidity.

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