To assess liquidity, check Level-2 Order Book Depth: look at capital sitting within ±1% and ±2% of mark price. If a $50k market order moves price 5%, liquidity is depleted. Poor liquidity means massive price impact and slippage. Yes, market makers can easily pump and dump: clearing paper-thin ask depth costs very little, and once short liquidations fire, exchange engines act as forced market buyers accelerating the squeeze. Trading illiquid float guarantees adverse selection.