#Liquidity101

Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. In crypto trading, a coin with high liquidity has many buyers and sellers, making it easier to execute trades quickly and at stable prices. Low liquidity, on the other hand, can lead to slippage, where trades are executed at less favorable prices. Liquidity also affects spreads—the difference between buying and selling prices. Centralized exchanges often offer higher liquidity due to more users, while some decentralized exchanges may struggle with it. Understanding liquidity is essential for avoiding losses and ensuring smooth trading.