#Liquidity101

Liquidity in crypto is crucial: it’s the ease with which a cryptocurrency can be bought or sold without significantly impacting its price. High liquidity means abundant buyers and sellers, leading to tighter spreads and less price volatility. Think of it like a bustling marketplace where trades happen quickly and efficiently. Conversely, low liquidity in smaller tokens or decentralized exchanges (DEXs) can lead to slippage – where your executed trade price differs from the expected price – especially for larger orders. For investors, understanding a token's liquidity is vital for managing risk and ensuring efficient entry and exit points.