Why investors get trapped by the liquidity illusion

There's a persistent myth in crypto investing: if an asset has high trading volume, it must be liquid. Wrong. Many traders discover this the hard way when they're sitting on a position worth millions on paper but can't actually exit without tanking the price.

This is the liquidity curse. You're wealthy in theory, broke in execution.

Here's what really happens. A token shows impressive 24h volume—looks safe, right? But dig deeper and you'll find most of that volume is wash trading or bots churning the same coins back and forth. Real exit liquidity? Dramatically thinner. Try moving even 5-10% of your position and watch the slippage destroy your returns.

The worst part? It's not always obvious until you need the cash. By then, you're locked into positions that look good on your portfolio dashboard but are practically illiquid in a real market stress event. Forced hodlers, not strategic ones.

The fix isn't complicated. Check actual order book depth, not just volume metrics. Understand the difference between perceived liquidity and real settlement liquidity. And for larger allocations, always have an exit plan—because a token's price means nothing if you can't actually sell it when you need to.