Liquidity is how much you can buy or sell without moving the price. A liquid market absorbs a large order quietly. An illiquid one lurches, because there simply is not enough resting interest to fill you near the last traded price.
That is why the quoted price of a thinly traded asset can be misleading. It tells you what the last small trade happened at, not what you could realistically transact. The number to look at is depth, not the last print.
Binance Academy covers this in more depth: https://www.binance.com/en/academy/glossary/liquidity
Trading crypto from Dubai since 2019.
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