Record High Liquidity in Meme Coins Facilitates Trading

Trading meme coins has become increasingly accessible with liquidity hitting all-time highs, as per data from Paris-based Kaiko. The total liquidity, measured by 1% market depth, for popular meme coins like DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic, has recently surged to $128 million.

This liquidity metric denotes the total value of buy and sell orders within a 1% range of the current market price. Higher liquidity makes it easier to execute large orders at stable prices.

Impact of Liquidity on Trading

Increased liquidity typically leads to a narrower 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. Tighter spreads result in improved trading pricing and reduced trade execution costs.

Despite the liquidity surge in meme coins, Kaiko reports that bid-ask spreads remain above 2 basis points on most centralized exchanges. This indicates that while more market makers are providing liquidity for these tokens, they are still perceived as risky due to their high volatility.

Market Analysis

According to Kaiko’s weekly newsletter, the rise in liquidity is partly attributed to price appreciations. Notably, small-cap meme tokens like Dogwifhat (WIF), Memecoin (MEME), and Book of Meme (BOME) have seen significant liquidity growth in native units, ranging from 200% to 4000%.