#Liquidity101 What is liquidity and why is it important?

Imagine you are selling an iPhone.

If you can quickly sell it for the desired price — it is a highly liquid asset.

And if you are selling an old mixer from the 90s and searching for a buyer for weeks — it is a low liquidity asset.

🔍 In finance, liquidity = how quickly and without loss in price you can buy or sell an asset.

🔹 High liquidity — more participants in the market, narrow spread, fast transactions.

Example: currency pairs on Forex, Bitcoin, Apple stocks.

🔹 Low liquidity — few participants, large price gaps, difficult to exit a position.

Example: rare NFTs, lesser-known tokens, or stocks of small companies.