Dogecoin outperformed Bitcoin and Ethereum according to liquidity metrics, while SHIB beat its counterpart in volume.
Despite DOGE’s excellence in market depth and spread, it doesn’t warrant a meme rally.
While much of the crypto community believes that memes are of little to no use, Dogecoin [DOGE] And Shiba Inu [SHIB] have proven to be of service in other areas as well. One area in which these dog-themed cryptocurrencies have continued to excel is “liquidity.”
Read Dogecoins [DOGE] price forecasts 2023-2024
Surprising right? Well, that’s because there’s a common misconception about how to balance an asset’s liquidity level. In general, investors believe that market capitalization is the best measure of an asset’s liquidity. However, that does not give us a realistic picture.
DOGE: BTC and ETH Wear No Crown in…
On December 8, 2022, Conor made Ryder through his Medium page. According to Kaiko’s research analyst, volume, market depth and spread contribute more to liquidity than assumed market cap.
Overall, the Kaiko data shared by Ryder placed DOGE above BTC and ETH in the liquidity ranks. This conclusion shows that market capitalization alone is not the only estimate of an asset’s working capital.
But how did DOGE beat the crypto kings? While DOGE failed to boast a huge volume impact, it ranked third in market depth and spread.
An asset’s spread is determined by calculating the difference between the best bid and the best ask in an order book within an interval.
Therefore, an open wide spread indicates weak liquidity and vice versa. Interestingly, DOGE was left alone Bitcoin [BTC] And Ethereum [ETH] in terms of spread.
The meme’s tighter spread helped it beat the fourth-ranked cryptocurrency in market value Binance coin [BNB]. Good, Ripple [XRP]And Cardano [ADA] also ranked under DOGE.
Source: Kaiko
In terms of market depth Kaiko data showed DOGE ranked fourth with only BTC, ETH and XRP moving forward as one of the best indicators of liquidity, market depth takes into account the full volume of open orders at the bid or late side.
So, with DOGE in the aforementioned position, it implied how easy it was to reveal the intrinsic value of the coin. On the other hand, SHIB failed to shine in market depth.
The spread was also wide, making it weak there. Regardless of the condition, excellent liquidity does not go beyond a price increase. That said, the question is: in what way did Shiba Inu outperform Dogecoin and others?
SHIB: thrive in the volume zone
In terms of volume, SHIB was the standout token as it beat its closest competitor DOGE in the race. Of course, the widespread belief is that volume correlates with order books.
But several incidents have shown that there are instances of manipulation and wash trading. So just taking into account market cap and volume is not the best measure to determine liquidity.
Source: Kaiko
Realistic or not, here it is SHIB’s market cap in terms of DOGE
However, data from Santiment showed that at press time DOGE SHIB was correct by on-chain volume. While SHIB was 434.36 million, DOGE’s volume was 594.71 million. But an evaluation over the past six months confirmed that SHIB beat its counterpart on that front.
Source: Sentiment
This post DOGE v. SHIB – Before investing, find out where their liquidity stands
was published first on https://ambcrypto.com/doge-v-shib-before-you-invest-know-where-their-liquidity-ranks/
