#Liquidity101 Liquidity is a key concept in crypto trading, but it is often misunderstood. In #Liquidity101 today's article, we explore why it is so important. Liquidity refers to the ease with which an asset can be bought or sold without significantly affecting its price. A market with high liquidity has many active buyers and sellers, allowing trades to be executed quickly and with less slippage. For example, Bitcoin and Ethereum usually have high liquidity, while smaller altcoins can experience large fluctuations when trying to trade significant volumes. Liquidity also impacts the spreads between the buying and selling price: the higher the liquidity, the smaller the spread. In DeFi, liquidity pools allow exchanges without the need for a traditional order book, but they can also have risks such as impermanent loss. In summary, understanding and considering liquidity before trading is essential to protect your strategy and your capital.