0 sats \ 2 replies \ @TheBTCManual OP 23 Jan 2023 \ parent \ on: What Is Bitcoin Liquidity? bitcoin
Liquidity is a bit of a weird one, while bitcoin does have slippage it has no shortage of buyers and since its supply is limited the more buyers (people with the need to hedge against fiat) come in, the market becomes more "liquid" thats not to say prices can't rip up or down, theres always a bid at some price
Even deep liquid markets like forex have slippage and require open market operations, different central banks hold reserves of currency pairs to try and maintain certain ranges bitcoin doesn't have that, its repriced by the market which is why I think it looks so strange, we're just not used to seeing a market like that operate
Bitcoin also possesses two uncommon features:
- Price insensitive buyers, DCA & transaction service users
- Zero demand response
Bitcoin relative to the pool of cash is small, from certain perspective though 10 times the size so is gold. But eventually the amount of cash required to shift the price of bitcoin will become large, and the growing number of holders who aren't expecting a narrow spread and take what bids they can find will learn to ask. Then we might see some smoothing.
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I agree with that, and
- I would also add that it as a P2P market for every currency pair in the world
- Its a bearer asset that can be lost
This isn't true for other assets
For sure trying to push value from cash and other assets into bitcoin isn't going to be a straight line, If I look at normie content they're still way off understanding it and allocate based on that understanding
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