Liquidity is one of the most critical elements in any financial market, especially in crypto trading. It refers to how easily a cryptocurrency can be bought or sold without significantly affecting its price. High liquidity means smoother and faster transactions, reduced slippage, and better price stability. Traders often prefer exchanges and coin pairs with high liquidity because it offers more flexibility and efficiency. Liquidity is influenced by the number of active users, the volume of trades, and market participation. Understanding liquidity helps in making better trading decisions and minimizing risk in volatile markets.
