In a world where the digital currency dance continues, a recent report from the on-chain data oracle, Kaiko, has cast a spotlight on the liquidity rankings of several crypto assets, including the heavyweights: XRP, SOL, BTC, and ETH. This scrutiny arises amidst the rising tide of altcoin spot ETFs and as the market depth daintily tiptoes back to the pre-FTX levels, as if nothing ever happened. Ah, the sweet smell of nostalgia!
Kaiko’s liquidity ranking indicator was birthed from the ashes of FTX’s collapse, a noble attempt to rescue us from the folly of relying solely on market cap to gauge a token’s true worth. Remember FTX’s native token, FTT? It soared to a market cap of nearly $10 billion, yet it was as liquid as a brick in a swimming pool. Hence, the birth of this indicator—because who doesn’t love a good plot twist?
Only a few large-cap tokens like $BTC, $ETH, $SOL, and $XRP have liquidity rankings that closely match their market cap.
Below we show the difference between market cap rank and liquidity rank.
— Kaiko (@KaikoData) February 18, 2025
According to Kaiko, only a select few large-cap tokens—XRP, BTC, ETH, and SOL—have liquidity rankings that are not just a figment of our imaginations but actually align with their market cap. In their study, Kaiko unearthed outliers that mislead the unsuspecting investor, who naively uses market capitalization as a stand-in for liquidity. This unfortunate scenario arises from a limited number of actively traded pairs and a significant portion of supply locked away, like a teenager’s diary—hardly accessible.
Meanwhile, while Bitcoin continues to reign supreme in trade volume, SOL and XRP are picking up speed like a tortoise on a caffeine rush. This trend hints that the crypto market is becoming less of a one-horse race, with more liquidity potentially flowing into the altcoin realm. However, let’s not get too excited; over half of the top 50 tokens are still struggling to muster more than $200 million in average daily volume. It’s like watching a marathon where half the runners are still tying their shoelaces.
XRP Gains Attention
In a plot twist that caught equity analysts off guard last week, Coinbase’s fourth-quarter earnings revealed that XRP contributed more to their trading revenue than ETH for the first time in recent memory. XRP’s 14% contribution during the quarter coincided with a surge in trading volumes, as some asset managers prepared to roll out the red carpet for spot XRP exchange-traded funds. Who knew XRP had such star power?
The rise in XRP volume has been a spectacle on all U.S.-based exchanges since November, just over a year after it was relisted on most platforms following a landmark victory in the Ripple-SEC saga. Talk about a comeback story!
Last week, the SEC acknowledged XRP ETF filings, a potential volatility trigger lurking in the shadows. Approval or denial could send trading into a frenzy. If the anticipation of its ETF approval unfolds like a soap opera, XRP may continue to boost trading-related revenues in the near term. Grab your popcorn, folks; this show is just getting started!
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2025-02-18 18:44