#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. In crypto, high liquidity means traders can quickly enter or exit positions, while low liquidity may cause price slippage. Major coins like BTC and ETH have high liquidity, especially on large exchanges. Liquidity is influenced by trading volume, number of buyers/sellers, and market depth. Decentralized exchanges may rely on liquidity pools, which are funded by users. Providing liquidity can earn fees, but also carries impermanent loss risk. Overall, understanding liquidity helps traders choose the right assets and avoid unnecessary trading costs.