The difference between Market Cap and Liquidity in the world of cryptocurrencies or stocks is significant and fundamental. Let me clarify the difference simply:

✅ First: Market Cap

🔹 It is the total value of the currency or asset in the market.

🔹 It is calculated as follows:

Current price × Number of circulating units

🔸 Example:

If a currency costs 2 dollars and there are 100 million pieces of it:

→ Market Cap = 2 × 100,000,000 = 200 million dollars

🔸 It reflects:

The size of the project.

Its ranking among other currencies.

The level of trust from investors.

⚠️ But it does not mean that all this amount is actually present in the market!

✅ Second: Liquidity

🔹 It means the ease of buying or selling the currency quickly without its price changing much.

🔸 High liquidity = many people are buying and selling, and it is easy to execute your order quickly.

🔸 Low liquidity = it is difficult to buy or sell quickly, and you may need to lower or raise the price significantly to find another party.

🔸 It is usually measured by:

Trading volume over 24 hours.

The presence of many close buy and sell orders.

📌 Illustrative example:

Currency A:

Market Cap: 5 billion dollars

Liquidity: Daily trading of only 50 million

→ This means it is large, but there are not many people trading it daily.

Currency B:

Market Cap: 200 million

Liquidity: Daily trading of 100 million

→ This means it is small, but people trade it a lot, and it is easy to buy and sell.