#Liquidity101

Liquidity is one of the most critical aspects of a healthy cryptocurrency market. It refers to how easily an asset can be bought or sold without causing a drastic change in its price. In highly liquid markets, there's a large volume of trades, meaning that buyers and sellers can transact quickly and at predictable prices. This reduces slippage and makes it easier to enter or exit positions. For both traders and investors, liquidity plays a crucial role in determining risk and market confidence. Low liquidity often leads to price volatility, while high liquidity creates a stable trading environment that encourages participation.