The Liquidity of Bitcoin

Abstract

This paper studies the liquidity of Bitcoin using the time series daily data over the period 1/1/2014 to 12/31/2015. Based on the available data for Bitcoin, five liquidity measures are chosen to compare the liquidities among five Bitcoin exchanges and the liquidities of different sizes of stocks. The results suggest that the liquidity of Bitcoin depends on the choice of the Bitcoin exchanges, and Bitfinex, one of the Bitcoin exchanges, provides the highest liquidity for Bitcoin trading. Moreover, the results indicate that, on average, stocks are more liquid than Bitcoin.