Liquidity in crypto refers to how easily an asset can be bought or sold without affecting its price. High liquidity means many buyers and sellers are active, so orders can be filled quickly at stable prices. Low liquidity means fewer participants, which can cause slippage—where your order executes at a worse price than expected. Liquidity plays a key role in order execution. Market orders in high-liquidity environments are filled instantly and at close to the market price. In low liquidity, even small trades can move the price significantly. Limit orders may take longer to fill if there isn’t enough liquidity at your chosen price. Overall, liquidity affects speed, cost, and efficiency of trades, making it essential for smooth and fair market activity.
