Meme Generation! What meme coin has better liquidity than USDT? Observing from the Volume / Market Cap indicator

Meme coins have been beloved by retail investors this year, with no "roadmap" of empty promises, no complex technological ideals, and no "very trash" VCs showing public support. Some institutions have even begun to promote the narrative of meme coins.

Meme Coins Have Better Liquidity Than Stablecoins

On May 16th, Bitcoin returned to $66K. Among the top 100 cryptocurrencies by market cap, the top ten coins in terms of Volume / Mcap ratio, excluding stablecoins, are all meme coins, indicating that meme coins have better liquidity than all other types of cryptocurrencies.

Among them, BOME even has a better Volume / Mcap ratio than the leading stablecoin USDT, demonstrating high liquidity matching its market cap.

Looking back at the Volume / Mcap historical data from January this year, the focus appeared to be on parallel execution blockchains like Sei and Sui, the Bitcoin ecosystem, L2, etc., indicating that liquidity was still distributed among various narratives. In contrast, the meme generation is entirely concentrated on meme narratives.

What is Volume / Mcap?

Volume / Mcap is an important indicator for evaluating the liquidity of financial assets such as stocks, cryptocurrencies, etc. This ratio provides information in the following aspects:

1. Liquidity Level:

• A high Volume / Mcap ratio indicates active trading in the market, high liquidity. This means investors can easily buy and sell the asset, less susceptible to drastic price fluctuations.
• A low Volume / Mcap ratio suggests lower liquidity, and investors may face larger price fluctuations and higher trading costs when buying and selling.

2. Market Sentiment:

• A high ratio may reflect strong market interest and attention towards the asset, whether due to high market sentiment, upcoming significant events, or increased investor confidence in the asset.
• A low ratio may indicate lower market interest in the asset or a market in a wait-and-see state.

3. Price Stability:

• Assets with high Volume / Mcap ratios typically have more stable prices because more market participants are buying and selling the asset, resulting in smoother price movements.
• Conversely, assets with low ratios may be more susceptible to price fluctuations due to large trades.

4. Investment Decision:

• Assets with high Volume / Mcap ratios are generally more attractive to investors as they are easier to trade due to the availability of buyers and sellers in the market.
• Assets with low Volume / Mcap ratios may require more careful analysis and cautious trading strategies to avoid risks due to insufficient liquidity.

Volume / Mcap is a useful indicator that helps investors understand market liquidity, sentiment, and price stability, enabling them to make wiser investment decisions.

What Trends Does the Meme Generation Reflect?

The author believes that the meme generation in the cryptocurrency market represents a combination of "fatigue towards technology," "lack of breakout topics," "weariness of venture capital involvement," and "high leverage demand with low chips."

Meme coins are mostly in full circulation from the beginning, reducing the presence of "visible" market makers, making retail investors feel there are no big capital manipulators behind the scenes, and no locked tokens that could affect the coin price in the future. With no technical barriers and no need to understand meme meanings and planning, one can gain early rewards by seizing opportunities. This aligns well with the retail investors' desire to risk small amounts for big gains, highlighting the crypto community's mentality of "just seeking wealth."

From a positive perspective, this phenomenon can start with meme coins gathering communities and gradually developing other real-world use cases, or it can be a transitional period in the new venture market lacking topics due to long-term technical development. Additionally, it is also a way to evade regulation.

From a negative perspective, as liquidity is concentrated in meme coins, it may accelerate the death of other less popular coins and encourage more crypto startups to issue useless tokens in meme form.

a16z mentions that the current regulatory situation favors meme coin speculation but is detrimental to innovative projects: SEC's goals for each role are not being met

Vitalik comments on the meme coin chaos: respects meme coin hype and also looks forward to witnessing higher-quality projects