#Liquidity101
💧 #Liquidity101 : What does liquidity mean in the world of finance and crypto?
Liquidity is the ability of an asset (like Bitcoin or the dollar) to be quickly converted to cash without losing its value.
🔁 If you can sell a currency quickly and its price doesn't change much = high liquidity
🐢 If selling takes time or you have to lower the price to sell = low liquidity
🎯 A simple example:
The dollar = high liquidity (you can cash it out anytime)
A rare piece of land = low liquidity (it may take months to sell)
In crypto:
Bitcoin and Ethereum have strong liquidity because many people trade them
Smaller or newer coins may have weak liquidity, meaning it's hard to sell them quickly
📌 Liquidity is very important, especially in a volatile market... so you can know when to exit at the right time 💡
