#Liquidity101 Liquidity is a core concept in trading and investing. It refers to how easily an asset can be bought or sold in the market without causing a significant change in its price. Highly liquid assets—like major cryptocurrencies or stocks—have a large number of buyers and sellers, ensuring quick trades and tighter spreads (difference between buy and sell price).

In contrast, low liquidity assets may take longer to sell and can result in higher slippage, meaning you might not get your expected price. Liquidity also affects volatility—less liquid markets often experience sharper price swings.

Centralized exchanges (CEXs) usually have higher liquidity due to their large user base, while decentralized exchanges (DEXs) can have varying levels depending on the token and platform. For traders, high liquidity is crucial for smooth entry and exit points. Whether you're a beginner or a pro, always consider liquidity before making a trade.