Liquidity refers to how quickly and easily an asset can be converted into cash without affecting its market price. In crypto trading, high liquidity means you can buy or sell coins quickly with minimal price fluctuations. For example, BTC and ETH are highly liquid due to their high trading volumes. Low liquidity assets, on the other hand, may have wider spreads and cause slippage during trades. Liquidity is crucial for smooth market functioning, better price discovery, and reduced volatility. Traders prefer high-liquidity markets for better execution and fewer risks. Always check trading volume and order book depth before entering a trade!
