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Operational liquidity Meaning

The amount of liquid assets (cash or crypto) a company or exchange holds to meet its day-to-day obligations. For a crypto exchange, operational liquidity ensures that when a user requests a withdrawal, the exchange has the funds ready to send immediately.

Lack of operational liquidity is often what kills exchanges during a "Bank Run." Even if the exchange is solvent (assets > liabilities), if those assets are locked up in illiquid investments (like real estate or VC deals), they cannot meet immediate withdrawal demands. Managing operational liquidity involves balancing the need for security (keeping funds in cold storage) with the need for access (keeping funds in hot wallets).

Rebalancing these pools is a critical daily operation for exchange treasury teams.

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