Liquidity Dispersion

Liquidity dispersion refers to the degree to which trading volume and order book depth are spread out or concentrated across different platforms. When liquidity is highly dispersed, it is difficult for a single venue to represent the "true" market price, leading to a reliance on aggregated data.

This dispersion can be caused by the proliferation of new exchanges, the growth of decentralized protocols, and the use of private trading venues. High dispersion often correlates with higher volatility and wider bid-ask spreads, as liquidity providers are spread thin across many books.

Understanding how liquidity is dispersed helps market makers decide where to allocate their capital and helps traders choose which venues to prioritize for execution. It is a structural characteristic of the evolving crypto market that directly impacts how prices are formed and maintained.