#Liquidity101

Liquidity refers to how quickly and easily an asset can be bought or sold without affecting its price. High liquidity means more buyers and sellers, tighter spreads, and faster trades—common in assets like Bitcoin or major stocks. Low liquidity can lead to price slippage and difficulty exiting positions. In crypto and trading, liquidity is crucial for stability, efficient pricing, and smooth execution. Exchanges (CEXs or DEXs) with strong liquidity offer better user experiences. Liquidity pools in DeFi allow users to provide assets for trading and earn rewards. Always consider liquidity before entering or exiting a trade to manage risk effectively.