Liquidity is a core concept in the crypto market, reflecting the ability to buy and sell assets without causing large price fluctuations. A highly liquid asset like BTC or ETH is often easy to trade with low spreads, high volumes, and quick order execution. In contrast, low liquidity tokens are prone to slippage, manipulation, and difficulty in exiting positions. The liquidity of an exchange is also important – an exchange with good liquidity helps ensure more stable trading. Investors should assess liquidity before entering a position to effectively manage risk and avoid unwanted losses.