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Liquidity refers to the ease and speed with which an asset, such as a cryptocurrency or stock, can be bought or sold without affecting its market price. In other words, it’s the ability of an asset to be quickly converted into cash without causing a significant change in its value.

In the context of crypto trading, liquidity is important because it affects the ease with which traders can buy or sell crypto assets. A highly liquid market will have many buyers and sellers, and it will be relatively easy to trade large amounts of a cryptocurrency without significantly affecting its price.