#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without causing a significant price change. In crypto trading, high liquidity means there are many buyers and sellers, which leads to tighter spreads, faster trade execution, and more stable prices. Low liquidity can cause slippage, where trades are executed at unfavorable prices, especially during high volatility. Liquidity is influenced by trading volume, exchange activity, and market participants. It plays a crucial role in risk management and strategy, making it essential for traders to consider when entering or exiting positions in the market.