An illiquid market refers to a situation where a financial asset, such as a cryptocurrency, cannot be easily bought or sold without causing a significant impact on its price. This typically occurs when there are few buyers or sellers active in the market.In an illiquid market, trading volumes are low, which means there may not be enough participants to facilitate swift transactions. As a result, large trades can lead to sharp price fluctuations, making it challenging for investors to enter or exit positions without incurring substantial costs.Illiquidity can arise from various factors, including a limited number of exchanges where a cryptocurrency is listed, a small market capitalization, or regulatory issues that hinder trading. Investors in illiquid markets may face difficulties in achieving desired prices, increasing the risks associated with trading.Overall, understanding market liquidity is vital for making informed investment decisions, as it can significantly affect profitability and risk management.