#Liquidity101
๐ง Liquidity 101: Why It Matters in Crypto Trading
Ever wondered why some tokens are easier to trade than others? Itโs all about liquidity. Letโs break it down ๐
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๐ง What Is Liquidity?
Liquidity = How easily you can buy or sell an asset without affecting its price.
๐น High liquidity = fast trades, small spreads
๐ช Low liquidity = price slippage, harder to exit
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๐ฆ Where Does Liquidity Come From?
Order books (CEXs like Binance)
Liquidity pools (DEXs like Uniswap)
Market makers who provide capital to keep markets active
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๐จ Why Liquidity Matters:
๐ Smooth entries & exits
๐ธ Less slippage = better trade prices
โ ๏ธ Protects against volatility
๐ง More confidence in token stability
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๐ Low Liquidity = High Risk
Canโt sell large amounts without crashing price
Often seen in micro-cap or low-volume tokens
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๐ฌ Always check liquidity before entering a trade.
Tools: CoinGecko, CoinMarketCap, DEXTools (for DeFi)
