#Liquidity101

Liquidity refers to how easily a cryptocurrency can be bought or sold without affecting its price. High liquidity means many buyers and sellers are active, allowing fast trades with minimal price changes—common in major coins like Bitcoin or Ethereum. Low liquidity means fewer participants, leading to price slippage and difficulty entering or exiting trades. Liquidity is crucial for stable markets, tight spreads, and smoother execution. Centralized exchanges usually offer higher liquidity than decentralized ones. Traders prefer high-liquidity assets for safer, more efficient trading. Always check a coin’s trading volume and order book depth to assess its liquidity before investing.