#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without affecting its price. Highly liquid assets, like major stocks or cryptocurrencies, have many buyers and sellers, allowing for quick trades at stable prices. Low liquidity means fewer market participants, which can lead to price slippage or difficulty executing trades. In financial markets, liquidity is crucial for efficiency and stability. Exchanges, especially centralized ones, often provide better liquidity than decentralized ones. Traders value liquidity because it reduces costs, improves order execution, and allows for flexible entry and exit. Overall, high liquidity enhances market confidence and performance.