Understanding liquidity is essential in crypto and DeFi.
Liquidity refers to how easily you can buy or sell an asset without affecting its price. A liquid market has many buyers and sellers, so trades happen quickly with minimal slippage.
For example, Bitcoin has high liquidity on major exchanges like Binance. But in low-cap tokens or some DeFi pools, a single trade can move the price drastically — like the recent $570M USDT withdrawal from Aave, which caused a massive spike in interest rates and liquidity stress.
💡 Tip: Always check liquidity before entering any trade.
