In the ever-changing world of cryptocurrency, liquidity is a crucial factor that determines the ease with which a token can be bought or sold without causing significant price fluctuations. Recently, Kaiko, a leading provider of institutional-grade cryptocurrency market data, released its Q1 Liquidity Ranking for Crypto Assets, which revealed some interesting insights into the liquidity of different cryptocurrencies.
According to the report, Litecoin (LTC) ranked fourth in liquidity across 19 exchanges, moving up four spots since the last quarter. This is a significant achievement for LTC, considering its market cap ranking of 11 (excluding stablecoins). The report suggests that LTC’s high trade volumes and deeper order books have enabled traders to buy or sell the asset with limited impact on price.
However, the report also cautions that trade volume alone is not adequate to fully assess liquidity in crypto markets. There can be discrepancies in the correlation between trade volume and order book liquidity, due to market manipulation or wash trading. The report notes that earlier this year, there were examples of LTC wash trading on Bitforex, indicating that the volume figure alone is not enough to conclude that LTC is particularly liquid.
The report also highlights other standout tokens for volumes in Q1 2023. Dogecoin (DOGE) saw a significant increase in volumes, ranking in an impressive third ahead of several larger cap tokens. This is a testament to the increasing popularity of DOGE, which has gained a massive following in recent years. Meanwhile, Polkadot (DOT) saw remarkably low volumes in Q1 2023 compared to some of its competitors of a similar size market cap, ranking 17th in volumes.
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