What is Liquidity?
Liquidity in crypto refers to the ease with which a cryptocurrency can be bought or sold without causing significant price changes. High liquidity indicates that there are many buyers and sellers, allowing for quick transactions at stable prices. It ensures that large trades can be executed without dramatically impacting the market price.
Low liquidity, on the other hand, can lead to higher volatility and larger price swings when buying or selling. Liquidity is crucial for the efficient functioning of the crypto markets, affecting everything from trading to price stability.