CoinucationLiquidity
Liquidity is how easily an asset can be bought or sold at a stable price; deep liquidity means large trades barely move the market.
Liquidity describes how much of an asset can be traded without significantly changing its price. In a liquid market there are many buyers and sellers at prices close to the current one, so a trade of even several million dollars fills quickly at roughly the quoted price. In an illiquid market a modest order can push the price sharply up or down.
Liquidity shows up in the bid-ask spread and in order book depth. Bitcoin on a major exchange might have a spread of a few cents on a price in the tens of thousands of dollars, with millions of dollars of orders within 1 percent of the price. A small token might have a 5 percent spread and only a few thousand dollars of orders, so selling 10,000 dollars' worth could drop the price by 20 percent.
On decentralized exchanges, liquidity comes from pools of tokens that users deposit. The size of the pool determines how much slippage a trade will have. Liquidity can also disappear suddenly during a crash, when market makers pull orders, which is one reason crypto prices can gap violently.