Liquidity

Liquidity describes how easily you can buy or sell an asset quickly without moving its price much. A liquid market has many buyers and sellers, tight spreads between the best bid and ask, and deep order books, so even large trades get filled near the quoted price.

Bitcoin and Ethereum are highly liquid on major exchanges. Small tokens can be very illiquid: a price on a chart may reflect only a few small trades, and trying to sell a meaningful amount can push the price down sharply or find no buyer at all.

Signals of liquidity include 24-hour trading volume, order-book depth near the current price and the bid-ask spread. Volume figures can be inflated by wash trading on less reputable venues, so compare several sources. On decentralised exchanges, liquidity comes from the size of the pool.