Liquidity > Token Price:

The ability to buy/sell tokens quickly with minimal price impact outweighs short-term price movements.

High Liquidity Relative to Market Cap Signals Market Health:

• Tokens with high trading volume-to-market cap ratios reflect genuine demand and lower price manipulation risks.

• Most trading pairs maintain liquidity below 5% of total market cap, the remaining portion not in circulation will be easily dumped onto the token's LP when needed. Tokens exceeding 15% liquidity-to-market cap ratios signal strong fundamentals and growth potential.

• Strong liquidity attracts traders/institutions by reducing slippage and improving price predictability.

High Trading Volume Creates Network Effects:

• More traders → deeper liquidity → lower transaction costs → further user adoption.

Token Prices Are Volatile; Liquidity Ensures Sustainability:

• Reduced "rug pull" risks when liquidity is spread across multiple pools/exchanges.

• Projects focusing on liquidity (e.g., liquidity mining incentives) often maintain stronger, more stable communities.

Conclusion:

Long-term market confidence hinges on liquidity depth, not short-term token prices. Assets with liquidity ratios exceeding market norms (e.g., 15%+ liquidity/Mcap) often represent undervalued opportunities.