๐ What Is Liquidity in the Crypto Market?
Liquidity is one of the most important concepts in crypto trading, yet many beginners ignore it.
๐น What does liquidity mean?
In simple terms, liquidity refers to areas where a large number of buy or sell orders are placed. These are usually found:
Above recent highs (buy-side liquidity)
Below recent lows (sell-side liquidity)
๐น Why does the market move toward liquidity?
Big players (institutions, market makers) need liquidity to enter or exit large positions.
Price moves toward these zones to trigger stop-losses and pending orders.
๐น Liquidity vs Trend
The market does not move randomly
It moves to collect liquidity first, then continues or reverses
Many โfake breakoutsโ happen because price is grabbing liquidity
๐น How traders can use liquidity:
Avoid placing stop-losses at obvious highs/lows
Wait for liquidity to be taken before entering trades
Combine liquidity with market structure for higher accuracy
๐ Understanding liquidity helps you stop chasing price and start thinking like smart money.