📘 #liquidity Why is liquidity the soul of the market?
Imagine wanting to sell a bicycle, but nobody wants it. What do you do? Wait, lower the price, or give up? The same thing happens in markets when there is a lack of liquidity.
🧠 What is liquidity?
It is the ease with which you can buy or sell an asset without its price changing too much.
💧 High liquidity = healthy market
Many buyers and sellers
Less difference between buying and selling prices (spread)
Faster and fairer transactions
🌵 Low liquidity = financial desert
Few interested parties = unstable prices
Risk of your order not being executed or being executed poorly
More volatility
📊 In crypto, liquidity matters more than ever:
It influences the real price of your token
Affects trading outcomes and slippage
Is key to choosing which pairs to trade (not just for trends)
⚠️ Maybe Tip:
Before entering a new token, check its liquidity. It can be the difference between winning or getting stuck in a trade with no exit.