Memecoins
Floki, Dogwifhat and Pepe lead memecoin rally alongside Ethereum ETF approvals
supposedly memecoins have rallied over the past week – and among the top five gaining cryptocurrencies are four Solana-based tokens. Floki is in the lead (up 35%), followed by dogwifhat (32%), Pepe (27%), and Bonk (22%), according to CoinGecko data as of Tuesday morning. Bonk hit a high of $0.00004387, narrowly missing its all-time high of $0.00004547 in March.
Price surges overlap with Securities and Exchange Commission Green Light for Eight Spot Ether Exchange Traded Fundswith companies such as black rockGrayscale and Fidelity, among the filers. Coins, considered the riskiest and highest-rewarding part of the crypto industry, often witnesses notable price swings during a pro-crypto news cycle. In contrast, Ether has climbed a modest 2% since Thursday’s approvals, trading at $3,847 Tuesday morning.
The ETF approvals have “people bullish on the edges of the coin space,” Derek Horstmeyer, a finance professor at George Mason University, told Fortune.
Indeed, Google Trends data shows that search interest in “Ethereum” over the past 12 months has reached unprecedented heights, and memecoins are “strongly motivated” by this type of market attention, explains Pat Doyle, blockchain researcher at Amberdata.
“The theory is that as money flows through the ecosystem through ETFs, it often trickles down to these smaller projects,” Jonathan Bixby, president of Phoenix Digital Assets, told Fortune. Memecoins have risen recently due to their “small caps” compared to other cryptocurrencies, he says.
Memecoins occupy only a fraction of the market cap of major currencies: Floki has a market cap of just $2.9 billion, compared to Ethereum’s $460 billion, according to CoinGecko data. In other words, Bixby suggests that fringe coin investors could expect a rising tide effect that will lift all boats once ETFs begin trading.
However, Matt Ballensweig, chief executive of BitGo, told Fortune that he does not attribute the recent growth of some memecoins to ETF approvals or a single event, but it is “a sign that momentum of other layers 1 (like Solana) continues to remain strong.
He added: “Solana has fundamentally solidified itself as the chain offering the most “speculative fun” as traders continue to bet on memecoins on decentralized exchanges.
One of the reasons Ether has shown minimal price movements since Thursday is likely because, so far, the SEC has only approved Forms 19b-4. These first deposits made by future issuers allow the securities to be listed on the stock exchange. But for trading in financial instruments to begin, the SEC must then approve issuers’ S-1 filings. These forms describe to potential investors and the SEC the structure of the asset, how it will be managed, and in this case, how it plans to reflect the performance of the underlying asset – the Ether tokens.
“We cannot recall a time when S-1s were not approved after a 19b-4 approval. I don’t think there’s any precedent,” Eric Balchunas, senior ETF analyst at Bloomberg, previously told Fortune. He estimated the forms would take about two weeks to be approved.