#Liquidity101 đ§ What is Liquidity in Crypto?
Liquidity refers to how easily a cryptocurrency can be bought or sold without affecting its price too much.
đč Example:
If you can buy or sell BTC quickly without moving the price, BTC has high liquidity.
But if selling just $500 worth of a token moves the price heavily â that's low liquidity.
đ Why Liquidity Matters in Trading:
â 1. Fast Trade Execution
High liquidity = your orders get filled quickly.
No delays or partial fills â ideal for scalpers & day traders.
â 2. Smaller Spread (Buy/Sell Gap)
Tighter spread = less slippage = better prices.
Example:
Buy: $1.000
Sell: $0.999 (only 0.1% difference)
In low liquidity pairs, spreads can go up to 3â5%.
â 3. Price Stability
High liquidity keeps the market stable even with big buys/sells.
Low liquidity = price swings and whale manipulation.
â ïž Dangers of Low Liquidity:
High Slippage â You might get a much worse price than expected.
Order Not Filled â Large orders may fail or get filled partially.
Pump & Dump Risk â Easier to manipulate low liquidity coins.
Fake Volume â Some tokens show fake liquidity; always verify on trusted sites like CoinMarketCap.
đ How to Check Liquidity?
24h Volume â Higher volume = better liquidity
Order Book Depth â On exchanges, deep order books = good liquidity
DEX Liquidity Pools â Check TVL (total value locked) in pools
Trading Pair Popularity â Top pairs like BTC/USDT or ETH/USDT always have high liquidity
đ Pro Tip for Traders:
đ§
âAlways match your trading size with the liquidity of the pair. Agar aap âč10,000 ka trade kar rahe ho low volume coin mein â price girne se pehle aap hi gira doge!â