How to identify the most liquid cryptocurrencies and why this is needed
Despite the fact that the cryptocurrency exchange rate has dropped significantly recently, interest in transactions in digital currency remains quite high.
Some people use cryptocurrencies in their current transactions, while others consider the current decline to be the best option for investing in this asset category.
The main question facing each potential investor is: “Which cryptocurrency should I invest in?”
In our case, one of the criteria for assessing the attractiveness of an investment asset is its liquidity, which is precisely the indicator that influences the ease of working with digital currency.
At the same time, it can be said that the concept of cryptocurrency liquidity is much broader, since here, in addition to price, the very possibility of selling the digital asset also plays a role.
How to evaluate the liquidity of a cryptocurrency:
• Speed of sale and purchase – how quickly a given asset can be converted into real money.
• Overhead costs – the amount of costs for exchange and withdrawal to a bank account.
• Participation in settlements – how often a given cryptocurrency can be used to pay for goods and services.
• Presence on trading platforms – important when making money on speculative transactions.
So, ultimately, we can say that the liquidity of a cryptocurrency is determined by its demand.
The most liquid cryptocurrencies today:
Bitcoin is the leader in liquidity; it is accepted everywhere cryptocurrencies are accepted, and this is not surprising, since Bitcoin was the first digital currency.
Thanks to its high liquidity and exchange fees, it offers the lowest exchange rates, making it possible to use Bitcoin for short-term speculation.
Ethereum has held the second position in the cryptocurrency market in popularity for several years now, and it can be easily exchanged on any exchange.
This asset is also present in almost every crypto ATM, which means the fastest possible exchange for cash.
Tether – this type of digital money belongs to the so-called stablecoins, which are assumed to have a highly stable price.
Indeed, most of the time, Tether is practically equal to the US dollar, a characteristic that has earned the cryptocurrency its popularity. It is used primarily for payments.
Ripple – it's unclear what its merits are, but Ripley is one of the most liquid cryptocurrencies and ranks sixth in terms of market capitalization.
Ripley's long-standing popularity has earned it a firm place on exchanges and online currency exchanges. Furthermore, it can be exchanged for cash with low fees.
Binance Coin is a cryptocurrency launched by the largest digital exchange and actively promoted by its users.
Therefore, despite its relatively young age, Binance Coin can already be found almost everywhere that deals with digital currencies.
Here's what the top five most liquid cryptocurrencies look like today; they're the best ones to use for transactions or speculation on the exchange rate.
