An inactive market differs from an active market primarily in terms of liquidity, trading volume, price movement, and market participation.

Liquidity & Trading Volume
In an active market, there is high liquidity, meaning many buyers and sellers are actively trading. This results in tighter bid-ask spreads and easy order execution. In contrast, an inactive market has low liquidity, with fewer participants, leading to wider spreads and difficulty in executing trades at desired prices.

Price Movement & Volatility
Active markets experience frequent price changes due to strong buying and selling pressure, whereas inactive markets have sluggish price movement, often remaining range-bound. However, when price changes do occur in an inactive market, they can be erratic due to low volume.

Market Participation
Institutional investors and retail traders are highly engaged in an active market, driving consistent volume. In an inactive market, participation is limited, often due to factors like time of day (e.g., after market hours), economic uncertainty, or lack of interest in a particular asset.

Impact on Traders
Traders in active markets benefit from faster execution and predictable price action. Inactive markets, however, pose challenges like slippage, increased transaction costs, and difficulty in exiting positions efficiently.