#Liquidity101

📘 Liquidity 101: Why It Matters in Crypto 💧

Ever heard the term “liquidity” but not sure what it means? Here’s a simple breakdown:

🔹 What is Liquidity?

Liquidity = How quickly & easily an asset can be bought or sold without moving its price too much.

📈 High Liquidity =

✔️ Tight bid-ask spreads

✔️ Easier entries/exits

✔️ Lower slippage

📉 Low Liquidity =

⚠️ Volatile price moves

⚠️ Large spreads

⚠️ Harder to trade big amounts

🧠 Why It Matters:

Traders need liquidity for fast execution

Investors want liquidity to avoid price crashes when exiting

Projects need liquidity pools to support healthy ecosystems (DeFi especially!)

💡 Pro Tip:

Always check the trading volume and order book depth before entering a position.

🛡️ Reminder:

Low liquidity = Higher risk. Don't get caught in an illiquid trap.