#Liquidity101 iquidity in crypto (and finance in general) refers to how easily you can buy or sell a cryptocurrency without significantly affecting its price.

• High liquidity = Easy to buy/sell quickly with minimal price change.

• Low liquidity = Harder to buy/sell; larger trades may cause big price swings.

🔹 Why Is Liquidity Important?

1. Efficient Trading: High liquidity = faster, smoother trades.

2. Price Stability: Prevents extreme volatility.

3. Lower Slippage: The difference between expected price and actual execution price is minimized.

4. Market Health Indicator: High liquidity signals strong interest and trust in an asset.

🔹 What Affects Liquidity in Crypto?

1. Trading Volume – More trades = more liquidity.

2. Exchange Listings – Coins listed on major exchanges (like Binance or Coinbase) usually have higher liquidity.

3. Number of Market Participants – More buyers/sellers = higher liquidity.

4. Token Distribution – Widely held tokens tend to be more liquid.

5. Utility and Hype – Coins with real use cases or community backing are traded more