Factors Influencing Liquidity Of Bitcoins

November 17, 2018 Quick read

One of the best features of Bitcoin is its liquidity. For those of you who do not know about liquidity, it is the ‘degree to which an asset is most realisable at a short notice without a loss, according to a definition by renowned economist John Meynard Keynes. This means that liquid transactions are the best for short term investments or when you need money urgently. Generally, shares and forex are seen as extremely liquid assets, but now buying cryptocurrencies like Bitcoin on Online Bitcoin Exchanges  are also seen as a great way to invest in liquid assets. However, the liquidity of Bitcoin is influenced with due to a variety of factors, let us discuss some of them.


Bitcoin is increasingly considered a liquid asset due to the fact that it is being accepted in many places-from small businesses to various online stores to online Bitcoin exchanges. The more Bitcoin will come into circulation, the more liquid this cryptocurrency becomes.  However, Bitcoin is still only accepted in far fewer online and offline businesses, if it needs to be a truly liquid asset, it will have to spread its wings wider for the entire world.


With the number of Bitcoin Exchanges, people can invest in and trade their Bitcoins whenever needed. The more accessible these exchanges are, the more is the potential for Bitcoin to gain liquidity in the market. Additionally, with worldwide exchanges, Bitcoin trading is done round the clock, further helping to increase liquidity.

Payment cards and ATMs

In the US, there is a network of Bitcoin ATMs that has been operational throughout the country. These ATMs are of utmost importance as they facilitate the buying of Bitcoins, especially for those people who are not comfortable with buying Bitcoins online. There are also Bitcoin to cash payment cards and ATM cards which are seen as a step in the right direction for increasing the usability and popularity of Bitcoin as a currency that rivals other fiat currencies.


Regulations for Bitcoin differ from country to country. Some countries have outright banned it, others have allowed people to use it with certain riders while yet others have disputed the way it works. Some countries are observing how Bitcoins work and are framing regulations accordingly. Despite the varied responses of Regulators all around the world, Bitcoin, as a virtual currency is seeing a fast paced growth. Bitcoins are available in many ways nowadays, through ATMs, online exchanges, transactions at casinos and shops and in many other ways. When the regulatory authorities of various countries ensuring customer protection and proper taxation is maintained, this could encourage more people to invest in virtual currencies like Bitcoin.


Many people have heard about Bitcoins but aren’t sure about how they work or what a virtual currency is. Among these people may be many prospective share brokers, traders or investors who want to invest in this new opportunity. However, many people still aren’t sure about cryptocurrency investments like Bitcoin due to misinformation or rumours. As Bitcoin transactions increase and its awareness increases as a result, there will be more and more people who would want to invest in this new opportunity.