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Author Topic: The real liquidity behind your favorite coins. The facts are in the "numbers".  (Read 476 times)
jabo38
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January 17, 2015, 05:33:59 PM
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Just for fun, I figured out what the liquidity for each coin is and the spread in between the buy wall and sell wall at each of these coins major exchange.  I only examined the top 10 on CMC. Then the results were judged by general Wall Street standards. The rule for trading a stock of a company is that it is healthy if liquidity is over 1% and the spread is under 1%.  If either of these numbers are at 1% it is considered okay, if not then it is an unhealthy stock.  Of the top ten coins only LTC and BTC are considered healthy by Wall Streets numbers.  The worst performer overall was Paycoin.  No surprise there.   Here are the breakdowns.  

LTC – 3.6% Excellent liquidity      Spread – under 1% - good
BTC – 1.2% Good liquidity under    Spread – under 1% - good
Bitshares – 0.55% Poor liquidity      Spread – under 1% - good
Peercoin – 0.46% Poor liquidity      Spread – under 1% - good
Stellar – 0.37% Poor liquidity      Spread – under 1% - good
Paycoin – 0.36% Poor liquidity      Spread – 5% - very poor
Doge – 0.22% Poor liquidity      Spread – 1% - okay
Maidsafe – 0.17% Very poor liquidity   Spread – 1% - okay
NXT- 0.15% Very poor liquidity      Spread – under 1% - good
Ripple – 0.12% Very poor liquidity   Spread – under 1% - good

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Stealthcoin
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January 17, 2015, 06:02:17 PM
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CMC is often faking data, i would not make any statistics with it.
jabo38
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January 17, 2015, 06:24:24 PM
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CMC is often faking data, i would not make any statistics with it.

You are right.  On top of that even if CMC doesn't fake the numbers, the exchanges that feed the CMC numbers can be faking.  The numbers that I feel like are closest to their actual numbers are those for BTC.  I think the LTC numbers are especially faked, but I don't have any proof so I just included them as is.  

But really, not sure where to get other numbers from, so I just used those.

I'll put numbers in parenthesis in the title.  

Furthermore, any fake numbers will be faking liquidity in a way that makes it look higher than it is, not lower.  Nobody would make liquidity look lower.  So at best we can assume the numbers I posted are a best case scenerio, and the reality is very likely much worse. 

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ronald98
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January 17, 2015, 08:00:53 PM
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How do you calculate the liquidity?
jabo38
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January 18, 2015, 06:56:46 AM
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How do you calculate the liquidity?

24-hour volume divided by market cap.

That basically means on one day hoe much of the money could move out of the system, or move in.

So for instance with Bitcoin it can and does have a health liquidity at 1%.

That isn't new money. Just like in wallstreet most of bitcoins numbers right now come from day traders moving in and out many times a day.

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chennan
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January 18, 2015, 08:08:33 AM
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The good liquidity means speculation involves a lot! The price is easy to be controlled and more possible to be under downward selling pressure! Or ether way limited long-term investors would see it as a good opportunity to buy!

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jabo38
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January 18, 2015, 11:46:39 PM
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The good liquidity means speculation involves a lot! The price is easy to be controlled and more possible to be under downward selling pressure! Or ether way limited long-term investors would see it as a good opportunity to buy!

Good liquidity is very important in an investment. If you enter a position in a crypto and there is no liquidity you are holding a bag. It doesn't matter what the price says, you simply can't get your money out.

This happened to me yesterday. I had $1500 across multiple exchanges. In one exchange I wanted to make a trade as I was trying to sell/buy across all the exchanges but one exchange in particular which I won't use anymore didn't even have enough liquidity for me to exit, so I was left holding a bag.  I had to just sit there and watch the market on all the other exchanges move.

The point is, if there is no liquidity and you have a big investment, those price numbers are just an illusion because you can't enter/exit on them in reality.

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