Neironix analytics department analyzed the top 10 cryptocurrencies by trading volume and their liquidity. The most liquid was the coin located in 34th place by capitalization.
What is the difference between trading volume and capitalization? Capitalization is the sum of all the assets in the market. However, it doesn’t mean that all these assets are daily traded at the stock exchange. Someone buys them once a year, someone once a month, others buy and sell assets dozens of times a day. Therefore, the trading volume can be both lower and higher, than the capitalization of the asset.
It is the number of sold and bought assets that is called the trading volume, and it considers completely all the traders and investors carrying out transactions in the market.
At the beginning of spring 2019, the trading volume on the cryptocurrency market was only $ 15 billion, and it was quite a large number, since the record was set in December 2017, when the trading volume was $ 49 billion.
In comparison with the spring period of 2019, the current trading volume quadrupled. However, it’s no longer a record, since on June 27 in 2019 a new one was set, which amounts to an incredible $ 130 billion. That is why the current $ 60 billion is perceived better. 90% of the sum of all trades is distributed for the following coins:
Bitcoin occupies a leading position in terms of trading volume, which is not surprising because it is the most important and popular cryptocurrency in the world.
With a gap of more than two times, Ethereum was placed on the 2nd line. It is the trading volume is 7.5 billion. And on May 16, 2019, he reached a record high of $ 18 billion. Since then, the trading volume on the coin has significantly decreased, however, as in the entire market as a whole.
Note that unexpectedly in the Top 10 a coin entered, occupying only 34th place by capitalization — Qtum. This coin appeared in early 2017 and was rapidly gaining its capitalization. This coin is especially prevalent in Asian countries; it becomes noticeable if you trace where it has the highest trading volume — BitForex, LBank, and Bithumb.
The second indicator on infographics is liquidity. And here the situation with coins changes dramatically:
As we see, in the first place appeared Qtum (QTUM) and Ethereum Classic(ETC), with a liquidity ratio above 100%. So what is liquidity, and why are Bitcoin and Ripl on this list weaving at the end?
Liquidity is the ratio between trading volume and capitalization, expressed as a percentage. This indicator is very important, because it shows how interesting the coin is to the market.
Based on this, the answer to the question of why bitcoin is only at the 9th position becomes obvious: too high capitalization does not allow the coin to rise. Only with an increase in trading volume, this situation can change, but there are the following obstacles:
- almost a half of all bitcoins are lost forever and they will not be able to trade on exchanges
- the majority keeps bitcoin as a tool store of value and are not going to trade it
- insufficiently high level of mass adoption for daily use, which indirectly leads to another minus
- low transaction speed at the moment
Therefore, coins with lower capitalization are more likely to take the lead in liquidity.
The indicators of volume, capitalization, and liquidity are inextricably linked, and with their help, one can determine the popularity of a coin and possible growth.
P.S. We did not include Stablecoins in the infographic, as we believe that they do not compete with other cryptocurrencies and have a different value.