#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means many buyers and sellers, tight bid-ask spreads and minimal price volatility. Low liquidity results in wider spreads, increased volatility and potential difficulty executing trades. In cryptocurrency markets, liquidity is crucial for stable trading and efficient price discovery. Factors influencing liquidity include market demand, trading volume and the number of market participants. Understanding liquidity helps traders assess market conditions, manage risk and make informed decisions. It's essential for both short-term traders and long-term investors to consider liquidity.