#Liquidity101 \#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without affecting its price. In trading, high liquidity means many buyers and sellers are available, enabling quick trades at stable prices. Low liquidity can cause price slippage, where orders execute at unfavorable rates. Crypto assets like Bitcoin usually have high liquidity, while smaller altcoins may have less. Exchanges with higher liquidity offer tighter spreads and better trading conditions. For traders and investors, liquidity is crucial because it impacts entry and exit efficiency, price stability, and overall market health. Understanding liquidity helps in choosing assets and timing trades effectively.