Liquidity refers to how easily an asset can be bought or sold without impacting its price.

High liquidity, like in Bitcoin markets, means tight bid-ask spreads and easier trades.

Low liquidity, often seen in small-cap altcoins, leads to higher spreads and price slippage, making trades costlier. Liquidity pools in DeFi, such as those on Uniswap, allow users to provide assets for trading, earning fees but risking impermanent loss.

Markets with deep liquidity attract more traders, ensuring stability, while thin liquidity can lead to volatility and manipulation risks. #Liquidity1011