#Liquidity101 Liquidity refers to how easily an asset can be bought or sold in the market without causing a significant price change. High liquidity means there are many buyers and sellers, making it simple to trade quickly at stable prices. For example, major cryptocurrencies like Bitcoin have high liquidity, allowing fast transactions with minimal price impact. Low liquidity, on the other hand, can cause price volatility and make it harder to enter or exit positions. Traders and investors prefer high liquidity as it reduces risk and improves market efficiency, making it a crucial factor in successful trading and investment decisions.