Liquidity refers to how quickly and easily an asset can be converted into cash without significantly impacting its market price. In crypto trading, high liquidity means there are enough buyers and sellers, allowing trades to happen quickly and at stable prices. Popular assets like Bitcoin and Ethereum typically have high liquidity. On the other hand, low liquidity assets can be harder to sell and may experience price slippage. This makes trading riskier and less predictable. Traders rely on liquidity for smooth execution, tighter spreads, and reduced volatility. Always assess liquidity before entering any trade, especially in volatile markets. Understanding #Liquidity101 is essential for both beginners and experienced crypto traders.
