A liquid market has enough resting orders on both sides that a normal-sized trade barely shifts the price. An illiquid one does not: the same order eats through several price levels before it fills. Liquidity is why two assets with identical prices can be completely different to trade, and why a position that looks easy to enter can be expensive to leave.
The visible measures are the bid-ask spread, the depth sitting within a percentage of the mid price, and trading volume. All three tend to move together and all three thin out in a sell-off, which is precisely when it matters most — liquidity is at its worst at the moment the most people want to use it.
How can I tell if a coin is liquid enough?
Look at the order book depth around the current price rather than the 24-hour volume. If the book cannot absorb the size you intend to trade within a fraction of a percent, the volume figure is not telling you what you need to know.
Last updated October 17, 2026