Memecoins
Meme Coin Liquidity Hits All-Time High of $128M, Even as Bid-Ask Spread Highlights Risk
Executing trades in top coins is easier than ever now that liquidity, measured by 1% market depth, has reached record levels, according to data tracked by Paris-based Kaiko.
The combined figure for DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu and HarryPotterObamaSonic recently reached $128 million, according to the data. The chart depicts the total value of buy and sell orders within 1% of the current market price. The greater the liquidity, i.e. the higher the figure, the easier it is to execute large orders at stable prices.
Generally, increased liquidity leads to a narrower spread between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept, the bid-ask spread. Tighter spreads ensure better trading prices and reduce the cost of executing trades. However, according to Kaiko, Meme Coins are unresponsive, and bid-ask spreads remain above 2 basis points on most centralized exchanges.
“This suggests that even as more market makers venture into providing liquidity for these tokens, they are still considered risky due to their high volatility,” Kaiko added.
“While part of this increase is related to price appreciation, many small-cap meme tokens such as Dogwifhat (WIF), Memecoin (MEME) or Book of Meme (BOME) have seen significant growth in liquidity in native units, ranging from 200% to 4,000%,” Kaiko said in a weekly newsletter.