#Liquidity101 #Liquidity101 (150 words in bullet points):

Definition: Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price.

High Liquidity: Assets like stocks, Bitcoin, and major fiat currencies (USD, INR) are highly liquid—easy to buy/sell quickly.

Low Liquidity: Assets like real estate, rare collectibles, or low-volume altcoins are less liquid—harder to sell fast or at fair prices.

Market Liquidity: Indicates how active a market is; high liquidity means tighter bid-ask spreads and less slippage.

Importance in Crypto:

Easier entry and exit from positions.

Less price volatility.

Better execution at desired prices.

Liquidity Providers (LPs): Users or institutions who add funds to trading pools (like in Uniswap) to facilitate smooth trading.

Centralized vs Decentralized Liquidity:

CEXs like Binance have centralized order books.

DEXs use AMMs and rely on liquidity pools.

Risks: Low liquidity increases chances of large price movements and slippage during trades.