GM. Assets go up and down in value for a myriad of reasons — demand, scarcity, brand, utility, perceived utility, the list goes on — but one key factor often overlooked is liquidity. If there is a liquid market to absorb large volumes, the risk of becoming a bag holder is reduced. The hodler of the asset can sell it anytime, therefore increasing option value and thus value of the asset. Highly liquid markets also reduce price disparity between the market price of an asset and the actual reali...