Favorite part that you have to understand in crypto, is the most important, is liquidity.
Liquidity runs the entire market. I don't care who you're listening to. Liquidity is more important than price. If you have people that are worth a billion dollars worth of Shiba Inu coin, and they can't sell it, then literally, is it really a billion dollars?
The liquidity is like a bank. People don't understand this concept, but if the liquidity pool has $2 million in it, and they are holding 100 million of the token, they can't sell 100 million, so it's not really worth 100 million. You essentially have to have more money in the liquidity pool for the potential sell.
A cryptocurrency liquidity pool is a collection of funds locked in a smart contract, providing liquidity for trading pairs and decentralized exchanges.
High liquidity is essential for selling large amounts because it ensures that there are enough funds available to absorb the sale without drastically impacting the price.
Conversely, when a project has low liquidity, even small buy orders can cause Significant price increases due to the limited supply.