It shows how easy you can exit your position, which is often a problem with newer coins or tokens.
If the liquidity is very low, let’s say less than 10x your investment, it will be impossible to sell that asset at current market price. So you should only invest in low-liquidity assets if you plan to hold that asset for a longer period of time and expect liquidity increase in the future.
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Liquidity:-
It shows how easy you can exit your position, which is often a problem with newer coins or tokens.
If the liquidity is very low, let’s say less than 10x your investment, it will be impossible to sell that asset at current market price. So you should only invest in low-liquidity assets if you plan to hold that asset for a longer period of time and expect liquidity increase in the future.
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