The liquidity of the cryptocurrency market is highly dependent on market sentiment and capital activity. During a bull market, mainstream coins (such as BTC, ETH) have ample liquidity and small bid-ask spreads; in a bear market or for small coins, liquidity can easily dry up, leading to large slippage or even an inability to execute trades. Centralized exchanges (CEX) rely on market makers to maintain liquidity, but there is a risk of misappropriating user assets; decentralized exchanges (DEX) depend on the depth of liquidity pools, and impermanent loss and transaction fees may suppress liquidity. Liquidity mining, while providing short-term incentives for capital inflow, can easily degenerate into a Ponzi scheme. Under tightening regulations, compliant market makers may become key. Liquidity is the lifeline of the cryptocurrency market, so one must be wary of liquidity traps under high volatility.