Yes — poor liquidity widens spreads, increases slippage, and amplifies volatility. It discourages institutional participation and weakens trading KPIs that exchanges monitor when assessing market quality. Thin books also make prices more susceptible to manipulation and sharp dislocations.

Liquidity is foundational infrastructure. Even strong narratives and active communities struggle in structurally illiquid markets. Addressing depth and spread stability early prevents downstream credibility and capital formation challenges.