💰 What Is Liquidity in Crypto?
Liquidity refers to how easily you can buy or sell an asset without causing a big price change. High liquidity = smooth trading. Low liquidity = price jumps and delays. It’s a key factor when choosing which crypto to trade or which exchange to use.
✨ Why It Matters
• Fast Trades: High liquidity means you can enter or exit positions quickly.
• Stable Prices: More buyers and sellers help keep prices fair and less volatile.
• Better Market Health: Liquid markets attract more traders and boost overall confidence.
💡 Real-World Analogy
Imagine selling a bottle of water. If you’re in a crowded stadium, you’ll sell it in seconds high liquidity. But in the middle of a desert with no one around? You’ll wait forever low liquidity.
🚀 Pro Tip
Check 24-hour trading volume and order book depth before trading. Low-liquidity tokens can lead to slippage, where you pay more (or get less) than expected.
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