#Liquidity101

Liquidity refers to how quickly and easily an asset can be converted into cash without affecting its market price. In simple terms, it’s about access to ready money. Cash is the most liquid asset, while real estate, art, or long-term investments are less liquid because they take time to sell.

In business and investing, liquidity matters because it shows how well a person or company can meet short-term obligations. High liquidity means you can pay bills or handle emergencies easily, while low liquidity can lead to financial stress.

For example, in stock markets, large-cap stocks usually have higher liquidity due to more frequent trading, whereas small-cap or niche assets may take time to sell.

In crypto, liquidity pools allow easy trading by providing tokens for exchange, making decentralized finance (DeFi) efficient.

Bottom line: the more liquid your assets, the more flexible and secure your financial position.