#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. Here's a breakdown:

High Liquidity:

• Many buyers and sellers

• Tight bid-ask spreads (small difference between buy and sell prices)

• Low price impact when trading

• Examples: Major currencies, popular cryptocurrencies like Bitcoin and Ethereum

Low Liquidity:

• Few buyers and sellers

• Wide bid-ask spreads

• High price impact when trading

• Examples: Less popular cryptocurrencies, small-cap stocks

Why Liquidity Matters:

• Easier to buy or sell assets quickly and at a fair price

• Reduces risk of large price swings

• Important for traders and investors

How to Check Liquidity:

• Trading volume

• Bid-ask spreads

• Market depth (order book)