Observing the Volume/Mcap Indicators: What are Memecoins, which exhibit better liquidity than USDT, in the meme generation?
Meme coins have gained popularity among retail investors this year. They do not have a “roadmap” or complex technological ideals, nor do they have the support of prominent venture capitalists. Even institutions have begun to praise meme coins.
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Meme coin liquidity surpasses stablecoins
What is Volume / Mcap?
1. Liquidity level:
2. Market sentiment:
3. Price stability:
4. Investment decisions:
What does the meme generation reveal?
On May 16, Bitcoin returned to $66,000. Among the top 100 coins by market capitalization, the top ten in terms of Volume / Mcap ratio, excluding stablecoins, are all meme coins, demonstrating that meme coins have better liquidity than other cryptocurrencies.
In fact, BOME even has better Volume / Mcap ratio than the leading stablecoin USDT, indicating a high level of liquidity matching its market capitalization.
Looking at the historical data of Volume / Mcap in January of this year, the topics at that time seemed to revolve around parallel execution public chains like Sei and Sui, the Bitcoin ecosystem, and L2. It appeared that liquidity was still distributed among various narratives. On the other hand, the meme generation was completely focused on the meme narrative.
The Volume / Mcap ratio is an important indicator for evaluating the liquidity of financial assets such as stocks and cryptocurrencies. This ratio provides information in several aspects:
– A high Volume / Mcap ratio indicates active trading and high liquidity in the market. This means investors can easily buy and sell the asset without being significantly affected by price fluctuations.
– A low Volume / Mcap ratio indicates lower liquidity, which may result in greater price volatility and higher transaction costs for investors.
– A high ratio may reflect strong market interest and attention towards the asset, whether due to high market sentiment, upcoming major events, or increased investor confidence in the asset.
– A low ratio may indicate lower market interest in the asset or a wait-and-see attitude.
When an asset has a high Volume / Mcap ratio, the price tends to be more stable because there are more market participants buying and selling the asset, leading to smoother price movements.
On the contrary, assets with low ratios may be more susceptible to large order trades and experience larger fluctuations.
For investors, assets with high Volume / Mcap ratios are usually more attractive because it means it is easier to find buyers and sellers in the market, facilitating trading.
Assets with low Volume / Mcap ratios may require more careful analysis and cautious trading strategies to avoid risks associated with low liquidity.
The Volume / Mcap ratio is a useful indicator that helps investors understand market liquidity, sentiment, and price stability, enabling them to make wiser investment decisions.
The author believes that the meme generation represents the comprehensive performance of the cryptocurrency market’s “fatigue towards technology,” “lack of breakout topics,” “weariness of venture capital involvement,” and “demand for low capital with high leverage.” Meme coins are often fully circulated from the beginning, reducing the visibility of market manipulators and the influence of locked tokens on future prices. Because there are no technical barriers and no need to understand the meaning and planning of memes, as long as retail investors seize the opportunity to enter early, they can reap early benefits. This aligns well with the retail investors’ desire to make big gains with small investments and highlights the cryptocurrency community’s psychological state of “only seeking wealth.”
From a positive perspective, this phenomenon can be seen as a way for the meme coins to gather communities first and gradually develop other real-world applications. It can also be seen as a transitional period in the long development of technology, lacking compelling topics in the new startup market. Additionally, it is also a way to evade regulation.
From a negative perspective, as liquidity concentrates on meme coins, it may accelerate the demise of other lesser-known coins while encouraging more cryptocurrency startups to issue useless tokens in meme form.
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a16z believes that the current regulatory situation favors meme coin speculation but hinders innovative projects, as the SEC’s goals for each role are not achieved.
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Vitalik comments on the chaos of meme coins: Respecting meme coin hype while also hoping to witness higher-quality projects.
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Volume / Mcap
Stablecoins
Meme coins
Further reading:
Solana meme coin platform Pump Fun experiences private key theft and flash loan attacks.
VanEck launches meme coin index “MEMECOIN” for gold investors who understand memes.
