Exit Liquidity

Definition:

This is basically what you do not want to be. All markets are based on liquidity i.e., the amount of money available in a market. Go to coin gecko or CMC and look at the average 24-hour trading volume on any coin. This gives you an indication of how many coins are bought and sold each day. High liquidity means you can buy or sell easily in the market without the price changing too much. Low liquidity means that if you are selling, there are almost no buyers and even a small sale will result in the price crashing… or in extremely low liquidity there may be nobody to buy your coins. When a whale owns a huge amount of a coin and wishes to cash out… they do not want to dump all coins on the market as the price will crash. The best way to counter this is to create huge buzz and hype and bring a lot of new buyers into the market. This means when the whale dumps their position, there are a lot of new people prepared to buy at the existing price and the price should not drop too much. Often however, shortly after this the manufactured hope will die down and then indeed the price will drop sometimes close to zero for the new holders. However, thanks to the exit liquidity, the whale has secured top dollar for their coins and can watch from the side lines eating popcorn while the plebs get rekt. These new market entrants could cynically be referred to as exit liquidity – the whale wants to exit and needs to find buyers.

Degen Chat

Piglet: “I do not want to be exit liquidity.”

Pooh: “In a way piglet, we are all exit liquidity for @Alameda and @threearrows”