💧 What is liquidity and why is it important in cryptocurrency?

#Liquidity101

Liquidity is one of the key terms that every trader and investor should understand.

🔹 Liquidity is the ability of an asset to be quickly bought or sold without a significant change in price.

📈 Example:

If a coin has high liquidity - you can buy/sell a large volume almost at market price.

If liquidity is low - even a small order can "move" the price, and you will get an unfavorable rate.

💡 Types of liquidity:

1. Exchange liquidity - how many orders are in the order book, how quickly they are executed.

2. Market liquidity - the total trading volume of the asset across all platforms.

⚠️ Low liquidity = high risk:

Difficult to enter/exit a position;

Increased volatility;

Potential price manipulation.

Want to know how to determine the liquidity of a coin on an exchange? Write "+" in the comments 😉#Liquidity101