#CircleIPO

Liquidity refers to how easily an asset can be bought or sold without affecting its price. High liquidity means assets trade quickly with minimal price changes—think of cash or major cryptocurrencies like Bitcoin. Low liquidity assets, such as rare collectibles or small-cap tokens, take longer to sell and may require price discounts. Liquidity is crucial for investors and traders because it reduces risk and improves price stability. In financial markets, exchanges with high trading volumes usually offer better liquidity. In DeFi, liquidity pools allow users to trade tokens without a traditional buyer or seller by using smart contracts. Overall, strong liquidity ensures smoother, fairer, and more efficient market activity for everyone.