What liquidity is in crypto: spread, order book, and slippage
Liquidity is the ability to buy or sell the size you need quickly, at a price close to the current one. The more orders sit in the book near the price, the less your trade moves it. Low liquidity is why a market order fills worse than the quote and why a small coin jumps on small trades.
In short
- Liquidity shows up in three things: the spread, order book depth, and turnover over a day.
- A market order takes resting orders one by one, so in a thin market the average fill is worse than the quote — that's slippage.
- The thinner the book, the more small trades move price: hence the sharp jumps and long wicks on small coins.
- 24h turnover is a quick way to filter out thin pairs, which is why screeners have a turnover floor.
The screener finds this for you
Everything described above is set up in the screener: pick a ready-made setup or your own thresholds, and alerts arrive by push or Telegram.
Why a market order filled worse than the price
An exchange order book holds limit orders: bids to buy below the price and asks to sell above it. A market buy takes the asks one by one, from the cheapest up, until the whole size is filled. An illustrative example: the coin is quoted at $2.00, and we buy 10,000 coins with a market order.
| Order price | Resting in the book | Bought | Paid |
|---|---|---|---|
| $2.00 | 2,000 | 2,000 | $4,000 |
| $2.01 | 3,000 | 3,000 | $6,030 |
| $2.02 | 6,000 | 5,000 | $10,100 |
| $2.04 | 10,000 | — | — |
Result: 10,000 coins cost $20,130, an average price of $2.013. That's 0.65% worse than the quote, and that difference is slippage. The trade also moved the price: the best ask is now $2.02, 1% higher. If 50,000 coins had been sitting at $2.00, the same order would have filled entirely at $2.00.
A limit order won't fill worse than the price you set, but it may not fill at all. A stop-loss usually triggers a market order, and a liquidation is a forced close at market, so slippage applies to them too.
How to tell if a coin is liquid: spread, depth, and turnover
Liquidity isn't a single number; it's pieced together from three measures. Spread and depth describe the market right now, turnover describes the past day. The numbers below are illustrative.
| Measure | What it shows | Illustrative example |
|---|---|---|
| Spread | The gap between the best bid and the best ask. It's what a “buy and sell right away” round trip loses before fees. | Bid $99.95, ask $100.05 — a 0.1% spread. On a thin coin, bid $0.0990, ask $0.1010 — already 2%. |
| Order book depth | How much money sits in orders near the price, say within 1%. | $2m of asks within 1% — a $50k buy barely moves the price. $20k of asks — the same buy runs through the whole 1% and beyond. |
| 24h turnover | How many dollars went through the pair in a day: volume in coins multiplied by price. | 4,000,000 coins at $0.25 — $1m of turnover. |
Liquidity is counted on each exchange separately: the same coin can have $50m of turnover on a large venue and $200k on a small one. What matters is liquidity where you trade, not the market-wide total.
Why illiquid coins jump so sharply
The price on a chart is the price of the last trade. When few orders sit near it, a single market trade moves it by whole percent, as in the order book example above. What that means in practice:
- Long candle wicks. A large order runs through empty stretches of the book, and a minute later price comes back.
- A stop fills worse than planned. An illustrative example: a stop-loss at $0.950, the book below is nearly empty, and the position closes at an average of $0.931 — another 2% of loss beyond the plan.
- Getting out is hard. Selling a $20k position on a thin coin means pushing the price against yourself.
- Price is cheaper to move on purpose. In a thin market a sharp pump or dump takes less money.
With leverage this gets more dangerous: a liquidation is a market order too, and in a thin book forced selling pushes price toward the next positions' liquidations.
24h turnover: a quick way to filter out thin pairs
You can't look through every coin's order book by hand, but turnover compares as one number. Turnover is counted in dollars, not coins: 1m coins at $0.01 is $10k, while 1m coins at $5 is $5m. The difference between volume and turnover is covered in “Volume vs turnover”.
Turnover has two limits. It describes the past day, while the book can thin out in minutes, for instance ahead of major news. And it can be inflated by wash trades that add no orders to the book. So turnover is a filter that cuts out clearly thin pairs, not a guarantee your order will fill without slippage. You can compare futures pairs by turnover on the 24h trading turnover page.
Why screeners need a liquidity floor
A screener reacts to a percentage change, and a percentage on a thin pair means little. An illustrative example: two coins rose 6% in 15 minutes. The first has $300k of daily turnover, and a buy of a few thousand dollars was enough for that move. The second has $80m, and the same percentage has real money behind it. Same percentage, different meaning.
A turnover floor removes the first case before it becomes an alert. A minimum open interest does the same on futures: if few positions are open on a pair, their closing won't move the market.
How the screener helps
Checking the book and turnover of one coin is easy; doing it for hundreds of pairs every minute isn't. That's why the site's screeners have minimum 24h turnover and minimum open interest filters, both in millions of dollars: pairs below the floor are skipped. The liquidation screener, for example, looks for coins where one side is crowded and pays funding, and these filters cut out pairs where a few positions closing wouldn't move the market. No need to pick a coin.
Common mistakes when judging liquidity
Market cap instead of liquidity
Market cap is price multiplied by the number of coins. It says nothing about how many orders sit in the book: a coin with a large market cap can have small turnover if few people trade it.Summing all exchanges
A coin's total turnover can be large while on your exchange it's hundreds of times smaller. An order fills in the book of the venue where you placed it.A percentage with no money behind it
+20% in an hour on a pair with a couple hundred thousand dollars of turnover is a handful of trades. Check how much money went through the pair before drawing conclusions about the move.Treating liquidity as constant
A book that was deep an hour ago can thin out in minutes: orders get pulled ahead of news and during sharp moves. Slippage tends to be largest exactly when you need to get out fast.A large market order on a thin coin
The quote in the terminal is the price for the first resting order only. Before sending a market order, compare its size with how much sits in the book near the price.Liquidity FAQ
What is liquidity in simple terms?
It's the ability to buy or sell the size you need quickly, at a price close to the current one. In a liquid market your trade barely moves the price; in an illiquid one it moves it noticeably, and you pay for that in slippage.
What is slippage in trading?
The difference between the quote and the average price a market order filled at. It appears when the order runs out of resting orders at the best price and takes the next, pricier ones. The thinner the book and the larger the order, the bigger the slippage.
How is liquidity different from trading volume?
Volume and turnover show how much was traded over a past period. Liquidity is how much can be bought or sold right now without moving the price much. High turnover usually points to a liquid market, but a book can thin out in minutes, and turnover can be inflated.
How do I check a cryptocurrency's liquidity?
Look at three things on the exchange you trade on: the spread between the best orders, how much money sits in the book within 1–2% of the price, and 24h turnover in dollars. A narrow spread, a dense book, and large turnover are signs of a liquid pair.
Why does a coin have different liquidity on different exchanges?
Each exchange has its own order book and its own participants. The same coin can trade tens of millions of dollars a day on a large venue and hundreds of thousands on a small one. An order fills only in the book of the exchange where it was placed.
How can slippage be reduced?
A limit order won't fill worse than the price you set, but it may not fill at all. A large size split into parts moves the price less than a single order. On a pair with a narrow spread and a deep book, slippage for the same order size is smaller.
How liquidity connects to liquidations is covered in “What leverage is”. Which turnover and open interest floors cut the noise is in “How to filter false alerts”, and every form field is explained in the liquidation screener settings.
Read next
What is funding rate: who pays and when
Funding is a payment between longs and shorts on perpetual futures: when it's charged, how to calculate it, what negative funding means, why exchanges differ.
What are perpetual futures? Spot vs futures
Spot vs perpetual futures: owning a coin or a position on price, funding, mark price, leverage, and liquidation. Worked examples and which screener sees what.
What is leverage in crypto trading
What leverage is in trading: margin, a worked liquidation price example, isolated vs cross margin, and why liquidations cascade.
