#Liquidity101

Why is liquidity important in cryptocurrency?

Liquidity is the ability of an asset to be quickly bought or sold without significantly impacting its market price. In the crypto market, high liquidity means that there are many buyers and sellers, resulting in small spreads and fast order execution.

In a low-liquidity market, large orders can cause significant price movements, leading to slippage—the difference between the expected and actual execution price.

To assess liquidity, look at how much of the coin is traded per day (24h/volume),

the smaller the gap between the buying and selling price, the better; choose large exchanges with popular coins.

To avoid slippage, place limit orders instead of market orders, buy in parts rather than the full amount, and trade when the market is active.

Liquidity is like the "smoothness" of the market. The better it is, the safer it is to buy and sell.