#Liquidity101
Market Makers - entities that provide liquidity by placing buy and sell orders to ensure flow.
Liquidity is the lifeblood of the cryptocurrency market; it determines how easily assets can be bought or sold without impacting the price.
Understanding liquidity helps traders make informed decisions and manage risks effectively.
The higher the liquidity - the greater the number of buyers and sellers, leading to smoother transactions and lower spreads.
Low liquidity - resulting in fewer market participants, causing price volatility and potential slippage.
Liquidity pools - users contribute assets to decentralized exchanges (DEXs) to facilitate trading and earn rewards.
Understanding how liquidity works enhances your trading strategies and reduces unexpected price movements. Stay informed and trade wisely!
