Most retail traders watch price charts obsessively, but experienced market participants focus on liquidity. Liquidity determines how easily assets can be bought or sold without causing large price movements. In crypto, where volatility is already high, liquidity often decides whether a move is sustainable or temporary.
During low-liquidity periods, even strong projects can experience sharp drops. This doesn’t always reflect declining fundamentals; it often reflects capital moving out of risk. When liquidity returns, assets with active development, strong communities, and clear narratives tend to recover first.
Understanding liquidity cycles helps traders avoid emotional decisions. Instead of chasing short-term pumps, disciplined traders wait for volume confirmation and structural shifts. In the long run, liquidity flows — not emotions — shape market trends.
