#BlackRockETHPurchase
💧 #Liquidity101 | What is liquidity and why is it important?
Liquidity means how easily an asset (like a cryptocurrency) can be bought or sold without significantly affecting its price.
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🔍 Simply put:
High liquidity = you can buy or sell quickly and at a price close to the market.
Low liquidity = hard to find a buyer or seller, and you may have to sell at a lower price.
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🏦 Practical example:
You want to sell 1 BTC:
On a platform with high liquidity: it sells immediately at the best price.
On a platform with low liquidity: it may sell at a lower price or take longer.
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✅ Why is liquidity important?
1. Faster order execution
2. Lower spreads
3. Less price volatility
4. Easier to exit trades when needed
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🧪 Where can we find liquidity?
Centralized exchanges (CEX): Often provide higher liquidity due to a large number of users.
Decentralized exchanges (DEX): Rely on liquidity pools.
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