The impending ruling in the high-profile legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has played a pivotal role in reshaping the liquidity dynamics in the crypto market. In a recent update to their quarterly crypto liquidity ranking, research firm Kaiko has unveiled the significant changes that have occurred in the liquidity landscape of crypto assets in Q2.
Among the standout performers in this quarter’s ranking is XRP, which has climbed to the third spot in the liquidity ranking despite ongoing legal uncertainties.
XRP Liquidity Takes Spot Behind BTC, ETH
Liquidity is a fundamental aspect of any financial market, and the cryptocurrency space is no exception. It refers to the ease with which an asset can be bought or sold without significantly impacting its price. High liquidity is desirable for investors as it facilitates smooth trading and reduces the risk of price manipulation. Conversely, low liquidity can lead to increased price volatility and limited trading opportunities.
XRP has experienced a notable upswing in liquidity, securing the third spot in Kaiko’s Q2 ranking. This surge can be attributed to multiple factors, including investors positioning themselves ahead of the anticipated ruling in the SEC vs. Ripple case. Speculation surrounding the outcome of this lawsuit has sparked increased trading activity, particularly on Korean exchanges, contributing to XRP’s rise in liquidity. Kaiko states:
XRP ranks third in volumes, up two places from last quarter as investors start to position themselves for the ruling in the SEC v Ripple case that is expected imminently. The token also saw a surge in volume on Korean exchanges.
As the chart above shows, XRP is also ranked number three behind Bitcoin and Ethereum in terms of market depth (of 1%). Market depth takes into account the total amount and size of open orders and is calculated using the number of buy and sell orders at different price levels on either side of the mid-price.
Accordingly, XRP also ranks 3rd in the overall liquidity score, behind BTC and ETH. The metric is derived by combining the two main liquidity metrics and averaging them. The lower the metric, the better its liquidity.
Other Noteworthy Developments
Kaiko’s liquidity ranking report also sheds light on several other noteworthy observations in the crypto market. ARB, the native token for the layer 2 rollup Arbitrum, made a strong entry into the liquidity ranking, surpassing several Layer 1 assets. AVAX, SOL and XMR liquidity rank improved 7 spots each over the quarter.
On the other hand, tokens like LEO, TON, TRX, and OKB continue to exhibit poor liquidity performance, cautioning investors against relying solely on market capitalization as a measure of liquidity.
At press time, the XRP price stood at $0.4723. After XRP was able to defend the 200-day EMA in several attempts against the bears, a symmetrical triangle pattern was formed. It can be both a bullish and bearish continuation pattern. It isn’t confirmed until the support or resistance level is broken.
Featured image from iStock, chart from TradingView.com