"Liquidity" refers to the ease with which an asset can be bought or sold in the market without significantly affecting its value. In other words, it is a measure of how quickly and efficiently an asset can be converted into cash or another asset without substantially changing its value. High liquidity means that there are many buyers and sellers in the market, which facilitates trading at or near the current market price. Assets with high liquidity usually have a tight bid-ask spread, meaning the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask). The difference between is small. Conversely, low liquidity indicates fewer buyers and sellers, which can lead to wider bid-ask spreads and higher trading costs. Illegal assets can also experience price slippage, where large orders can move the market price significantly. Liquidity is an important consideration for investors and traders, as it can affect transaction costs, price volatility, and the ability to easily enter or exit positions.