What role does Bitcoin’s liquidity play in price stability?

Liquidity refers to how easily Bitcoin can be bought or sold without significantly affecting its price. High liquidity leads to smoother price movements, while low liquidity can result in sharp price swings. Factors such as exchange volume, market depth, and institutional participation influence liquidity levels. During market panics or major sell-offs, liquidity often dries up, leading to rapid price declines. Conversely, strong liquidity stabilizes prices and attracts more institutional investors. Traders monitoring Bitcoin’s market stability can check btc price live for real-time liquidity insights.