#Liquidity101

Liquidity is the ability of an asset to be quickly bought or sold without significantly impacting its price. In cryptocurrency, high liquidity means that trades can be easily executed with minimal spread between buying and selling. On exchanges, liquidity is provided by a large volume of orders in the order book. Low liquidity leads to slippage — when the execution price differs from the expected price. For traders, this is a risk, especially with large volumes. Liquidity also affects volatility: the less liquidity there is, the greater the price fluctuations. Always consider liquidity before entering a position.