Liquidity

Liquidity represents one of the most important concept – aside from market capitalization – that everyone needs to understand when trading or investing in cryptocurrencies. Liquidity is the degree to which a particular asset can be quickly bought or sold without affecting the general stability of its price. In simplest terms, liquidity refers to the ability of an asset to be converted into cash easily. The most liquid asset in existence is cash, since it is very stable and can be readily accessed and easily spent on buying, selling, paying debts or meeting immediate wants and needs. Therefore, cash is commonly used as the standard to gauge an asset’s liquidity.