💧 What is liquidity? And why does it matter to you as a crypto investor?
Liquidity is the ability of an asset to be converted into cash quickly without significantly affecting its price. The higher the liquidity, the easier it is to enter and exit the market flexibly and at a lower cost.
📊 Examples to understand the idea: – A stock like Apple: high liquidity, sells quickly and with a small price difference.
– A rare painting: low liquidity, and you might wait months to sell it at the right price.
⚠️ In cryptocurrencies, liquidity is a key factor:
Projects with low liquidity may be tempting but are risky, as selling in them can lead to a sharp drop in price.
🧠 In summary:
Understanding liquidity = safer trading and smarter choices. Don't neglect this concept in your investment decisions!