SOL, the Solana blockchain’s native coin, has been a top performer over the last year, reaching new highs in late December. The rally halted briefly before SOL resumed its advance, reaching highs of $118.48 in today’s session.
However, a recent analysis by Kaiko, an on-chain research provider, reveals that SOL is falling behind BTC and ETH on the liquidity index.
According to Kaiko, SOL continues to show a lower market depth-to-volume ratio on centralized exchanges than BTC and ETH.
Market depth is described as the market’s ability to support relatively large market orders without affecting the asset’s price.
👉 #SOL continues to show a lower market depth to volume ratio on centralized exchanges than #BTC and #ETH.📊 pic.twitter.com/UEh6yD1a6h
— Kaiko (@KaikoData) February 15, 2024
Typically, market depth is closely associated with liquidity (the degree to which an asset can be quickly bought or sold in a marketplace at stable prices). If market depth is “deep” for a certain currency pair, it indicates that there is a significant volume of open orders on either the bid or ask side, making it easier to exchange the asset at prices that reflect its intrinsic value.
In the case of the market depth to volume ratio, larger values represent more market depth relative to volume, whereas lower values might suggest lesser market depth relative to volume.
The drop in Solana’s market depth-to-volume ratio relative to that of Bitcoin and ETH might have been driven by significant SOL volumes and an ongoing lack of liquidity. This, however, proves significant, as it can be a useful metric for assessing tokens and identifying anomalies on exchanges.
At the time of writing, SOL was down 1.38% in the last 24 hours to $116.
