Kaiko Reports $128M Liquidity Surge
Trading meme coins has become easier than ever, with liquidity levels hitting record highs. According to Paris-based data firm Kaiko, popular meme coins like DOGE, SHIB, and PEPE now boast a combined liquidity of $128 million.
Read on to understand in what way this development will impact the meme coin market.
Rising Liquidity in Meme Coins
Kaiko reports a significant increase in the liquidity of meme coins, allowing for smoother and more stable trades. The rise typically narrows the bid-ask spread, which is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. This usually leads to better trading prices and reduces transaction costs. However, despite the higher liquidity, bid-ask spreads for meme coins remain above 2 basis points on most exchanges, indicating continued high volatility and perceived risk.
Growth in Small-Cap Meme Tokens
Smaller meme tokens like Dogwifhat, Memecoin, and Book of Meme, have seen remarkable growth, with liquidity increasing between 200% and 4000%. This surge is partly due to price gains, highlighting the growing interest in these niche markets.
Implications for the Meme Coin Market
Increased liquidity suggests a maturing market for meme coins, potentially attracting more investors. Yet, the high volatility and wide bid-ask spreads indicate that these assets are still risky. While more market makers are participating, the caution remains due to the unpredictable nature of meme coins.
In conclusion, the spike in meme coin liquidity marks a significant development, making trading these assets easier. However, high volatility continues to pose risk. Meme coin traders should stay vigilant as the market evolves, balancing potential gains against inherent risks.
