#Liquidity101 the basis of understanding liquidity in financial markets. Liquidity is the ability of an asset to be quickly bought or sold without significantly affecting its price. Highly liquid markets (such as Bitcoin or shares of large companies) have many buyers and sellers, providing stability and a smaller spread. Low liquidity can lead to sharp price fluctuations and difficulties in executing orders. In DEX, liquidity is often supported by pools (AMM), while in CEX it is supported by deep order books. #Liquidity101 helps to understand why liquidity is critically important for effective trading and minimizing risks.
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