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Meme Coin Liquidity Hits Record High Even as Bid-Ask Spread Spotlights Risk

Jun 20, 2024
  • Record liquidity, measured by 1% market depth, suggests ease in executing orders and stable prices.
  • Nevertheless, bid-ask spreads remain elevated, a sign the tokens are still considered relatively risky.
As a seasoned crypto investor with years of experience under my belt, I find the recent surge in record liquidity for meme coins like DOGE, SHIB, and others an encouraging sign. According to data from Kaiko, the 1% market depth for these tokens has reached unprecedented heights, making it easier than ever to execute trades at stable prices.Trading popular meme coins has become more accessible than before due to the significant increase in liquidity. This heightened liquidity is indicated by a 1% market depth that has reached new peaks, as monitored by Kaiko in Paris.
As a crypto investor, I’ve noticed an intriguing development in the market recently. The collective value of open buy and sell orders for DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic has surged to a total of approximately $128 million. This figure represents the aggregate worth of orders lying within a 1% price range from the current market price. The larger this figure, the more liquidity there is in the market, making it simpler for me to execute larger transactions at stable prices.
Meme Coin Liquidity Hits Record High Even as Bid-Ask Spread Spotlights Risk

As a researcher studying financial markets, I have observed that an expansion in market liquidity generally results in a decreased difference between the highest buy order and the lowest sell order, also known as the bid-ask spread. Narrower spreads ultimately lead to more efficient pricing for trades and lower execution costs. However, an intriguing exception to this trend is meme coins. According to data from Kaiko, these digital assets have not shown any significant response to increased liquidity, and their bid-ask spreads continue to exceed 2 basis points on most centralized exchanges.

Kaiko noted that an increasing number of market makers are entering the market to offer liquidity for these tokens. However, their volatile nature continues to classify them as high-risk investments.

As a researcher studying the cryptocurrency market, I’ve observed that while some of the growth can be attributed to price appreciation, small-cap meme tokens like Dogwifhat (WIF), Memecoin (MEME), and Book of Meme (BOME) have experienced substantial increases in liquidity measured in their native units. These increases range from twofold to over four thousand percent.

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2024-06-21 15:18