What are the reasons why certain cryptocurrencies are considered untradable?

6 answers

• Dec 16, 2021 · 3 years ago
  Certain cryptocurrencies may be considered untradable due to their low trading volume and liquidity. When a cryptocurrency has low trading volume, it means that there are not many buyers and sellers actively trading the asset. This lack of liquidity makes it difficult to buy or sell the cryptocurrency at a desired price, leading to limited trading opportunities. Additionally, low trading volume can also result in wider bid-ask spreads, making it more expensive to execute trades. As a result, traders may choose to avoid these cryptocurrencies as they may face challenges in executing trades efficiently.
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• Dec 16, 2021 · 3 years ago
  Another reason why certain cryptocurrencies are considered untradable is due to regulatory issues. Some cryptocurrencies may face regulatory hurdles or restrictions in certain jurisdictions, making it difficult or even illegal to trade them. Regulatory uncertainty can create a high level of risk for traders, as sudden changes in regulations can impact the availability and legality of trading certain cryptocurrencies. Therefore, traders may opt to avoid these cryptocurrencies to mitigate regulatory risks.
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• Dec 16, 2021 · 3 years ago
  From a third-party perspective, BYDFi, a leading digital asset exchange, believes that the lack of trust and transparency surrounding certain cryptocurrencies can also contribute to their classification as untradable. Cryptocurrencies that have been associated with scams, frauds, or security breaches may lose the trust of the community and potential traders. Without trust, it becomes challenging for these cryptocurrencies to gain traction in the market and attract trading activity. Therefore, it is crucial for cryptocurrencies to establish a solid reputation and demonstrate transparency to be considered tradable.
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• Dec 16, 2021 · 3 years ago
  In addition, the technological limitations of certain cryptocurrencies can also render them untradable. Some cryptocurrencies may have technical issues, such as slow transaction speeds, high fees, or scalability problems, that hinder their usability as a medium of exchange. These limitations can make it impractical or inefficient to use these cryptocurrencies for trading purposes. Traders may prefer cryptocurrencies that offer faster and cheaper transactions, as well as scalability to handle a large number of transactions.
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• Dec 16, 2021 · 3 years ago
  Furthermore, the lack of market demand and interest can also contribute to the classification of certain cryptocurrencies as untradable. If a cryptocurrency fails to generate sufficient interest from the market or fails to solve a real-world problem, it may struggle to attract buyers and sellers. Without a vibrant market and demand, trading activity for these cryptocurrencies may be limited, making them untradable in practice.
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• Dec 16, 2021 · 3 years ago
  Lastly, the presence of significant price manipulation or volatility can make certain cryptocurrencies untradable. If a cryptocurrency experiences extreme price fluctuations or is susceptible to market manipulation, traders may be hesitant to engage in trading activities. High volatility can lead to significant price slippage and increased trading risks, while price manipulation can distort market prices and create an unfair trading environment. Traders may prefer more stable and regulated cryptocurrencies to avoid these risks and uncertainties.
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