#Liquidity101 Liquidity 101: The Basics

Liquidity refers to how easily an asset can be bought or sold without affecting its price. In crypto or stocks, high liquidity means lots of buyers and sellers—trades happen quickly and at stable prices. Low liquidity means fewer participants, causing price slippage and delays. For example, Bitcoin has high liquidity; a small token on a new exchange might not. Liquidity is crucial for efficient markets—it reduces risk and helps you enter or exit positions smoothly. Whether you’re trading on a CEX or DEX, always check an asset’s liquidity before jumping in. It can make or break your trade.