#Liquidity101
Crypto liquidity refers to how easily a cryptocurrency can be bought or sold without significantly impacting its market price. Here's a breakdown:
*Factors affecting crypto liquidity:*
1. *Trading volume*: Higher trading volumes usually mean more liquidity.
2. *Market capitalization*: Larger market caps often indicate more liquidity.
3. *Exchange listings*: Being listed on multiple exchanges can increase liquidity.
4. *Order book depth*: A deep order book with many buy and sell orders indicates more liquidity.
*High liquidity cryptos:*
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
*Low liquidity cryptos:*
- Some altcoins or newer tokens with low market caps and trading volumes.
*Risks of low liquidity:*
- Price volatility
- Difficulty buying or selling quickly
- Potential for price manipulation