Memecoins
Meme Coin Liquidity Reaches Record Level of $128 Million Even as Bid-Ask Spread Highlights Risk
Executing trades on prominent meme coins is easier than ever now that liquidity, measured by the top 1% market depth, has risen to 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 rose to $128 million, the data shows. The figure depicts the total value of buy and sell orders within a range of 1% of the current market price. The deeper the liquidity, i.e. the higher the figure, the easier it will be to execute large orders at stable prices.
In general, greater liquidity leads to a narrower gap 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 trade execution costs. Meme coins, however, are unresponsive, according to Kaiko, and bid-ask spreads remain above 2 basis points on most centralized exchanges.
“This suggests that although more and more market makers are venturing 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 200% to 4000%,” Kaiko said in a weekly newsletter.