#Liquidity101 | What is liquidity and why is it important in the world of crypto? 🤔💧

Liquidity refers to how easily a financial asset can be bought or sold without a significant change in its price. In the world of cryptocurrencies, the higher the liquidity, the easier it is to enter and exit the market at fair prices without delays or sharp fluctuations.

🔹 In centralized exchanges (CEX): liquidity depends on the number of buyers and sellers in the market.

🔸 In decentralized exchanges (DEX): liquidity relies on the liquidity pools provided by users themselves.

🔄 Liquidity is important because it:

Reduces slippage.

Speeds up order execution.

Makes the market more efficient and stable.

If liquidity is weak, you may find it difficult to execute your trades or they may be executed at an unfavorable price.

💡 Tip: Before entering any project or trading a specific pair, always check the level of liquidity. A market without liquidity is like a car without fuel. 🚗⛽

#Crypto #Trading #Blockchain #DeFi #Liquidity101