Crypto Liquidity: How to Find a Reliable Provider?

FinanceFeeds Editorial Team

Meanwhile, the crypto market undergoes an explosive splash, and the number of holders exceeds 300 million globally. The industry is a perfect chance for newer business owners who want to follow the trend. Liquidity is still of much concern, as the market is relatively young and trading volumes are much lower when compared to the FX market.

While speaking of liquidity for brokerage businesses, the FX industry is the first association that comes to mind. FX brokers dealing without liquidity providers frequently offer worse conditions for traders.

CFD Vs Spot liquidity: what is the difference?

Speaking of crypto liquidity, we need to distinguish two instruments: CFDs and spot digital assets. Liquidity is exceptionally important in both cases, but it works in different ways.

Such instruments mean that a trader doesn’t buy underlying assets. Furthermore, this financial opportunity unlocks leverage and a set of trading tools and analytical options – crypto CFDs are traded on the same platforms as Forex CFDs. Top-rated brokerage companies enable their clients to trade numerous in-demand pairs with BTC, ETH, XRP, and other digital assets, while the role of an LP lies in connecting order books to deep liquidity pools.

What is a liquidity pool for crypto CFDs? That is a network of crypto trading platforms, brokerage firms, OTC orders, hedge funds, and other players that buy and sell large volumes of digital currencies. When an order is placed by a trader, LPs deliver it to market makers that execute requests. The process takes place instantly, and traders avoid price gaps and high spreads specific to brokers with low liquidity.

As for the spot liquidity of digital assets, the notion acts in a completely different way. For instance, a cryptocurrency has its own liquidity within a trading platform, depending on the demand among traders and holders. Furthermore, the overall trading volumes of an exchange show how liquid a platform is. Traders join crypto exchanges with high trading volumes; this is why newer platforms prefer to apply to LPs that connect exchanges to liquidity pools – pools mainly contain some other exchanges.

What are the steps to finding a reliable provider?

Business owners understand what is a liquidity provider in cryptocurrency, but the core steps still lie ahead. You need to find a provider that matches your business goals.

Top-rated providers always unlock access for both crypto spot and crypto CFD liquidity. Which aspects to take into account?

  1. The number of available instruments. Such an aspect refers to CFDs foremost, as contracts for digital assets are considered as rather young instruments. Most LPs provide liquidity for some 10-20 trading pairs, and that is not enough for professional traders. Business owners need to find some market leaders. B2Broker provides liquidity for more than 100 in-demand pairs.
  2. Margin conditions. According to traders, leverage is the core advantage of crypto CFDs; this is why margin requirements do matter. Top-rated LPs provide up to 1:5 leverage; meanwhile, B2Broker enhances opportunities for its clients, offering leverage up to 1:10 for some pairs.
  3. Spreads. Traders know well that lower spreads are better; this is why brokerage companies need to compare spreads. B2Broker offers BTC spreads starting from just $0.1.

While talking about the other important conditions, top-rated LPs guarantee minimal execution time and high-quality 24/7 technical support.

B2Broker is acknowledged as the market-leading liquidity provider for crypto, and more than 50% of brokerage firms having CFDs for digital currencies prefer to deal with this company, as a primary or secondary provider.

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