#Liquidity101 Liquidity in cryptocurrency refers to how easily a digital asset can be bought or sold without significantly affecting its price. High liquidity means there are enough buyers and sellers in the market, allowing for fast transactions at stable prices (e.g., Bitcoin or Ethereum). Low liquidity, often seen in small altcoins, leads to slippage—where large orders drastically change the price. Liquidity depends on trading volume, exchange availability, and market depth. Centralized exchanges (CEXs) like Binance provide high liquidity through large order books, while decentralized exchanges (DEXs) rely on liquidity pools (e.g., Uniswap’s AMM model). Liquidity is crucial for traders, as it reduces risk, enables arbitrage, and ensures fair pricing. Projects improve liquidity via incentives like staking rewards or market-making programs.