#Liquidity101 Understanding Crypto Liquidity: Why It Matters

Liquidity is a core concept every trader must understand. In simple terms, liquidity refers to how easily an asset can be bought or sold without affecting its price. High liquidity means tighter spreads, faster execution, and more stable prices—great news for traders. Low liquidity, on the other hand, leads to slippage and volatile swings, especially during high-volume trades.

In the crypto world, liquidity can vary greatly between coins, exchanges, and trading pairs. Major tokens like BTC and ETH typically have deep liquidity, while smaller altcoins may suffer from thin order books.

Decentralized exchanges (DEXs) rely on liquidity pools, while centralized exchanges (CEXs) use order books. Either way, always check trading volume and depth before making a move.

Smart traders prioritize liquidity—it can be the difference between a good trade and a costly mistake.

#Liquidity101 #CryptoTradingTips #DeFiBasics