How Does Slippage Occur in High-Volatility, Low-Liquidity Crypto Markets?

Slippage occurs when a trade is executed at a price different from the expected price, usually worse for the trader. In low-liquidity, high-volatility markets, a large order can quickly exhaust the available orders at the best price level in the order book.

This forces the execution price to move to less favorable levels, causing significant slippage and higher transaction costs.