Liquidity is effectively a measure of the ability to buy or sell a particular asset at its current market value. For example, if you have bitcoin and want to exchange it for US dollars, there must be enough demand on the other side of your order to sell it at the current exchange rate.

This phenomenon of not being able to buy or sell large amounts of a particular asset at its market price is known as slippage. Cash is widely accepted as the most liquid asset in the world because it can buy virtually anything without slippage.

Bitcoin is intended as a form of digital currency, but it falls far short of the liquidity