#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without causing a significant change in its price. High liquidity means there are plenty of buyers and sellers, so trades happen quickly and at stable prices—like with major stocks or popular cryptocurrencies. Low liquidity means fewer participants, leading to slower trades and more price volatility.

In financial markets, liquidity is crucial. It affects how fast you can enter or exit a trade, the costs (via slippage or spreads), and how stable the market is. Exchanges, assets, and trading pairs with high liquidity are generally safer and more efficient for traders and investors.