What is liquidity in cryptocurrency?

Liquidity in cryptocurrency refers to how easily a cryptocurrency can be bought or sold without significantly affecting its price. A highly liquid market has many buyers and sellers, which allows for fast execution of trades at the current market price. Cryptocurrencies with high liquidity, such as Bitcoin and Ethereum, are more easily traded and less susceptible to price manipulation. On the other hand, low liquidity can result in slippage, where trades are executed at unfavorable prices. Liquidity is an important consideration for traders, as it impacts their ability to enter and exit positions efficiently and at a fair price.