#Liquidity101

Liquidity in Crypto: What It Means and Why It Matters 💧

Liquidity refers to how easily and quickly you can buy or sell a cryptocurrency without causing a significant change in its price. High liquidity means there are many buyers and sellers in the market, so large trades can happen smoothly at stable prices. Low liquidity means fewer participants, which can cause price swings and make it harder to trade without losses. For traders, liquidity is crucial because it ensures they can enter or exit positions without big price impacts. Exchanges with high liquidity are preferred for trading as they offer tighter spreads and better prices. Understanding liquidity helps you make smarter trading decisions and avoid unexpected losses. Always check liquidity before trading any crypto asset.