Why is the bid-ask spread wider for less popular cryptocurrencies?

3 answers

• Dec 26, 2021 · 3 years ago
  Less popular cryptocurrencies often have a wider bid-ask spread due to lower liquidity. With fewer buyers and sellers in the market, it becomes more difficult to match orders at the same price, resulting in a wider spread between the highest bid and the lowest ask. This can lead to higher trading costs and increased price volatility for less popular cryptocurrencies.
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• Dec 26, 2021 · 3 years ago
  The wider bid-ask spread for less popular cryptocurrencies can also be attributed to market inefficiencies. These cryptocurrencies may not be traded on as many exchanges or have as many market makers, leading to less competition and less efficient pricing. As a result, traders may need to pay a higher premium to buy or sell less popular cryptocurrencies, widening the spread.
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• Dec 26, 2021 · 3 years ago
  According to BYDFi, a digital currency exchange, the wider bid-ask spread for less popular cryptocurrencies is primarily driven by lower trading volumes. When there are fewer trades being executed, it becomes harder to find a counterparty at the desired price, resulting in a wider spread. This is why it's important for traders to consider the liquidity and popularity of a cryptocurrency before entering a trade.
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