Liquidity Grab refers to a situation where market participants suddenly rush to liquidate their positions in a particular asset, leading to a significant decrease in the asset's liquidity. This can occur for various reasons, such as a sudden shift in market sentiment or a change in regulatory policies.

During a liquidity grab, market participants may sell their positions at any price, leading to a sharp decline in the asset's value. This can create a vicious cycle, as falling prices trigger more selling, which further reduces liquidity and exacerbates the decline in price.

Liquidity grabs can be particularly damaging to markets that rely heavily on short-term funding, such as money markets, as a sudden lack of liquidity can cause a chain reaction of defaults and bankruptcies. Therefore, it is crucial for regulators to monitor markets and take appropriate measures to prevent or mitigate liquidity grabs.