#Liquidity101 #liquidity101

Liquidity refers to how easily an asset can be converted into cash without affecting its market price. In crypto, liquidity is crucial for smooth trading experiences. High liquidity means there's a healthy amount of buyers and sellers, making it easy to enter or exit positions. Low liquidity can lead to slippage — where you get a worse price than expected due to limited volume. Centralized exchanges (CEXs) and decentralized exchanges (DEXs) often use liquidity pools to ensure smoother transactions. For traders and investors, understanding liquidity helps assess the risks of holding or trading a coin. Always check liquidity metrics before investing!