XRP and Dogecoin (DOGE) are two of the top four most liquid cryptocurrencies, only behind Bitcoin (BTC) and Ethereum (ETH), according to an analysis by blockchain analytics platform Kaiko.
This research casts doubt on the widely held belief that market capitalization is a reliable indicator of a cryptocurrency’s price and liquidity.
How did they take into account factors for assessing crypto liquidity?
Kaiko argues in their report that liquidity, which measures how easily an asset can be traded, offers a more accurate indicator of cryptocurrency value. They assert that market capitalization and fully diluted value only provide partial insights into a cryptocurrency’s value proposition.
The asset’s price and the quantity of tokens used are essential factors in market capitalization. Meanwhile, liquidity factors in various variables, often extending beyond prices, such as the cost of trading the same asset measured by spreads and supported exchanges.
According to Kaiko, liquidity decreased overall in Q3 2023 for both categories.
AVAX, DOGE, And LTC Drops, Shining
According to Kaiko, the liquidity of XRP, DOGE, Cardano (ADA), and Solana (SOL) all performed following their market capitalization rankings. Using market capitalization as a guide, XRP and DOGE emerged among the top four, although they were generally among the most liquid.
Despite this, Litecoin (LTC) ranked fifth among the most liquid cryptocurrencies, exceeding its market cap rating. LTC is ranked 17th with a market capitalization of more than $5.6 billion, according to CoinMarketCap.
Despite this, Litecoin (LTC) ranked fifth among the most liquid cryptocurrencies, exceeding its market cap rating. LTC is ranked 17th with a market capitalization of more than $5.6 billion, according to CoinMarketCap.
While LTC performed better, other companies saw a decline in the liquidity rankings, including Uniswap (UNI), Avalanche (AVAX), Shiba Inu (SHIB), and Cosmos (ATOM). AVAX lost a lot of liquidity and fell 11 places. This is true even though the coin has had fantastic success over the last several trading months.
Regarding quantitative value, AVAX has surpassed Bitcoin (BTC) by more than 400% in just the past two months.
In the meantime, one of the most extensive liquidity gainers is Bitcoin Cash (BCH), given how well its prices performed in the most recent quarter. In addition to pushing trading volumes to all-time highs, rising prices also increased liquidity.
Meanwhile, Tron (TRX), Stellar (XLM), and Ethereum Classic (ETC) all moved up the rankings, according to Kaiko.
