#Liquidity101 Liquidity101 introduces the fundamental concept of liquidity in financial markets. Simply put, it's how easily and quickly an asset can be bought or sold without significantly affecting its price. Highly liquid assets, like cash or major cryptocurrencies, can be traded instantly at fair market value. In contrast, illiquid assets, such as real estate, take longer to sell and might require a price discount.

Why is liquidity important? It ensures efficient trading, reducing slippage (the difference between expected and actual prices). High liquidity also indicates a healthy market, attracting more participants and fostering price stability. Factors like trading volume, number of active traders, and exchange listings all influence an asset's liquidity. Understanding liquidity is crucial for investors to confidently enter and exit positions.