CDS Crypto News Crypto News – Meme Coin Liquidity Soars to Record High, But Risky Bid-Ask Spread Raises Concerns
Crypto News

Crypto News – Meme Coin Liquidity Soars to Record High, But Risky Bid-Ask Spread Raises Concerns

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Meme Coin Liquidity Soars to Record High, But Risky Bid-Ask Spread Raises Concerns

Crypto News – Meme Coin Liquidity Climbs to All-Time High Amid Risky Bid-Ask Spread

Crypto News- Executing trades in popular meme coins is now easier than ever, with liquidity hitting record highs. According to data from Paris-based Kaiko, the liquidity of major meme coins, as measured by 1% market depth, has surged significantly. This metric represents the total value of buy and sell orders within 1% of the current market price, and it recently rose to an impressive $128 million for a group of prominent meme coins including DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic.

Crypto News - Meme Coin Liquidity Soars to Record High, But Risky Bid-Ask Spread Raises Concerns

What High Liquidity Means for Traders

The higher the liquidity, the easier it is to execute large trades without affecting the market price. This deep liquidity usually leads to a narrower bid-ask spread, meaning the difference between the highest price a buyer is willing to pay and the lowest price a seller will accept gets smaller. This narrowing spread ensures better pricing for traders and lowers the cost of executing trades.

Bid-Ask Spreads Remain Wide Despite Liquidity Surge

Despite the surge in liquidity, meme coins are not seeing a corresponding reduction in bid-ask spreads. Kaiko’s data shows that spreads remain above 2 basis points on most centralized exchanges. “This suggests that while more market makers are providing liquidity for these tokens, they are still seen as high-risk due to their volatility,” Kaiko explained.

Significant Growth in Smaller Meme Coins

The rise in liquidity is not just driven by price appreciation but also by significant growth in native units for many small-cap meme tokens. For instance, tokens like Dogwifhat (WIF), Memecoin (MEME), and Book of Meme (BOME) have experienced liquidity increases ranging from 200% to a staggering 4000%, as noted by Kaiko in their weekly newsletter.

Conclusion

While the record liquidity in meme coins facilitates easier and potentially more cost-effective trading, the persistent wide bid-ask spreads indicate ongoing risks. The volatility of these tokens remains a concern for traders and market makers alike.

FAQ

What is meme coin liquidity and why is it important?

Meme coin liquidity refers to the ease with which meme coins can be bought or sold in the market without significantly affecting their price. It is a measure of how quickly large orders can be executed without causing substantial price changes. Liquidity is crucial because it ensures that traders can enter and exit positions efficiently, without incurring significant slippage costs.

For more up-to-date crypto news, you can follow Crypto Data Space.

Crypto News - Meme Coin Liquidity Soars to Record High, But Risky Bid-Ask Spread Raises Concerns

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