Exit liquidity is the ease with which a trader can exit their position and cash out their cryptocurrency assets. For example, traders can become someone’s exit liquidity when they trade their money for a digital asset without the ability to resell it due to various reasons (i.e., a lack of buyer or token value). Exit liquidity poses risks in crypto trading, as some traders may have bought assets sold at high prices by early traders, while those early traders then successfully exit at the expense of the buyer.
Exit Liquidity
Key Takeaway
Exit liquidity is the ease with which a trader can exit their position and cash out their cryptocurrency assets. Traders can become someone’s exit liquidity when they trade their money for an asset without the ability to resell it due to various reasons.
