Liquidity is a simple concept. When there are lots of buyers and sellers you can move in and out of a currency quickly and at good prices. When there are too few buyers and sellers it may take longer to exit and the prices can be more volatile as a result.
Another way to look at this subject is crypto assets that can be exchanged for fiat currency right away are said to be more “Liquid” than the one’s that can not.
When you can promptly sell or buy a particular asset it means there is a good supply of other parties (counterparts) who are willing to trade. In contrast, when there are fewer willing parties an investor might need to wait much longer, until his or her order is executed.
Here at HubKoin.com we take pride in the fact that we help make it possible for you to buy and sell financial instruments in a fast and efficient way – without having to wait too long or to accept unfair prices.
For example, Bitcoin is usually a very liquid market because there are always traders willing to buy or sell BTC, and the difference between the bid (buying) and ask (selling) price is usually very small.