#Liquidity101

Liquidity in crypto refers to how effortlessly a digital asset can be bought or sold without causing major fluctuations in its value. Strong liquidity indicates a large number of active participants, enabling quicker and more consistent transactions. It plays a crucial role in smooth trading by minimizing price swings and reducing slippage. Factors such as trade volume, availability on exchanges, and overall market engagement affect liquidity. Well-known cryptocurrencies like Bitcoin and Ethereum typically have robust liquidity, whereas obscure altcoins may experience low liquidity, making them more difficult to trade. Solid liquidity reflects a vibrant market, allowing traders to enter or exit positions with minimal price disruption and improved risk control.