#Liquidity101 💧 Understanding Liquidity in Crypto Markets

Liquidity measures how quickly and easily a crypto asset can be bought or sold without causing major price changes. High liquidity means many buyers and sellers are active, leading to tighter spreads and faster trade execution. Low liquidity creates slippage—when trades fill at worse prices than expected. Bitcoin and Ethereum typically have high liquidity due to large trading volumes, while smaller altcoins often face liquidity challenges. Liquidity is crucial for traders, especially during volatile markets, as it directly impacts order execution, pricing efficiency, and overall market stability. Well-liquid markets reduce risk and improve trading performance significantly.