Kaiko, one of the leading providers of cryptocurrency market data, has released its quarterly cryptocurrency report for the second quarter of the year, providing an update on the liquidity rankings of various crypto assets.
The report highlights the direct impact of recent lawsuits filed by the US Securities and Exchange Commission (SEC) on the liquidity of assets defined as securities. In addition, the report compares the liquidity scores of each asset with its market value, revealing the most misleading tokens in terms of liquidity.
Among the key findings of the report, it turns out that the liquidity of APT and ARB tokens is better than their market value and that these tokens are more liquid than their size. On the other hand, LEO, TON, TRX and OKB tokens have much worse liquidity than their market caps suggest and can be quite misleading for investors who rely on market cap as a liquidity indicator.
The report also reveals that there were significant changes in liquidity rankings in the second quarter. AVAX, SOL, and XMR tokens all witnessed a significant improvement in liquidity, with each token rising seven places in the rankings. In contrast, ATOM, FIL, and MATIC tokens suffered the most significant drops in liquidity rankings during the quarter.
Kaiko’s liquidity ranking model takes into account a variety of metrics, including volumes and market depth. Volumes are strongly linked to order book liquidity metrics such as market depth and spread, but relying solely on trading volume may not adequately assess liquidity due to potential market manipulation.
Notable tokens with high volumes in Q2 include XRP and ARB, while BCH stands out for lack of volume despite the latest EDX exchange listing announcement. (This report was published ahead of BCH’s recent rallies.)
Market depth, which takes into account the level and breadth of open orders, is another important factor in evaluating liquidity. Tokens like FIL and ATOM have witnessed a significant reduction in market depth due to their designation as securities in SEC lawsuits. One of the most liquid exchanges, Binance’s native token BNB continues to show limited depth despite its high market cap.
The report concludes by emphasizing that assuming a token’s liquidity is equivalent to its market value should be avoided.
*Not investment advice.