#Liquidity101

Liquidity refers to how easily a cryptocurrency can be converted into cash or a bank balance without significantly affecting its price. It is a crucial factor in trading. If you purchase digital assets that cannot be quickly or easily liquidated, you may face challenges when immediate access to cash is needed.

Poor liquidity can also lead to significant price fluctuations. In situations where a cryptocurrency cannot be bought or sold at the desired time due to low liquidity, the resulting delay can cause unfavorable price changes. Since the crypto market is highly volatile, timing is critical. A lack of liquidity may prevent timely execution of trades, which could result in missed profit opportunities or unexpected losses.