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Liquid market Meaning

A market where there are many buyers and sellers, high trading volume, and low transaction costs. In a liquid market, you can buy or sell a large amount of an asset almost instantly without causing a significant change in its price.

High liquidity is characterized by a "Tight Spread" (a very small difference between the buy and sell price). It is the sign of a healthy and mature market.

Bitcoin and Ethereum are highly liquid markets, whereas a new "meme coin" with only $10,000 in trading volume is an "illiquid" market. For investors, liquidity is a form of safety.

It means that if you need to "get out" of your position quickly, you can do so at a fair price. This is why institutional investors only trade in liquid markets; their positions are so large that they would "break" an illiquid market if they tried to enter or exit.

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