#Liquidity101
The key to efficient trading
Liquidity is the soul of the crypto market. Without it, transactions become costly and difficult to execute.
But what exactly is liquidity?
💧 Liquidity = Ease of buying and selling An asset with high liquidity means you can buy or sell it quickly without affecting its price. On the other hand, low liquidity can lead to large price fluctuations with small orders.
📊 Factors that affect liquidity:
• Trading volume: More buyers and sellers, higher liquidity.
• Market depth: A solid order book facilitates transactions.
• Institutional interest: The participation of large players can improve stability.
🚀 Why does liquidity matter?
A liquid market allows for tighter spreads, fast order execution, and less risk of slippage. For traders, this means better opportunities and less uncertainty in their moves.