#Liquidity101

Liquidity is one of the most important concepts in crypto trading. It refers to how quickly and easily a cryptocurrency can be bought or sold in the market without causing significant price changes.

A highly liquid market has plenty of buyers and sellers, meaning orders are filled quickly at stable prices. Popular coins like Bitcoin and Ethereum have high liquidity due to their large trading volumes. In contrast, lesser-known altcoins or new tokens may have low liquidity, resulting in larger price swings and slippage.

Liquidity also affects spreads (the difference between buying and selling prices) and overall market efficiency. Exchanges with better liquidity provide smoother trading experiences. It’s always safer to trade in markets with good liquidity, especially for larger positions.

Keeping an eye on liquidity helps traders manage risk, avoid slippage, and execute trades more efficiently.