Memecoins
The decline of memecoins: investors prefer other cryptocurrencies
In the crypto industry, it is clear that memecoins will not disappear completely. However, recently the trading activity and overall market value of memecoins are decreasing.
Although some “abnormal” coins have managed to stay afloat, most memecoins are struggling to keep up with the recent market shift.
It appears that investors are diverting their attention and money to more established assets like Bitcoin and Ethereum. Let’s see all the details below.
Crypto News: Trading Activity and Overall Value of Memecoins Decline
As expected, recently cryptocurrencies like Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) underperformed the rest of the market.
Showing a reversal of the trend from the enthusiasm that had previously characterized the sector.
According to data from CoinGeckoThe overall memecoin market capitalization declined over the past 24 hours, recording a 2.7% decline and reaching $55.48 billion.
Among the coins that suffered the biggest losses, Bonk (BONK) fell 6% over the past day. Floki (FLOKI) lost 3.3%, while Memecoin (MEME) comes in third position with a drop of 3% over the same period.
DOGE, the top meme coin by market capitalization, saw its price drop 2.1% in one day, bringing its overall value to $22.74 billion.
Despite the decline, DOGE continues to represent almost 41% of the overall market of memecoins.
Even its main competitor, SHIB, saw a decline on May 6, with a 2.4% loss that brought its market capitalization down to $14.29 billion. This consolidation keeps it firmly as the second most popular memecoin.
Even altcoins are falling: the continuing decline after the memecoin boom
Historically, cryptocurrency bull markets tend to be driven by an altcoin boom.
However, in line with the current memecoin price correction, even Total3the total market capitalization of all cryptocurrencies excluding Bitcoin and Ether, suffered a setback after the rally that began in October 2023.
Concretely, Total3 has fallen 15% since the first week of April, reaching $661.41 billion. This decline led to the formation of a descending parallel channel on the weekly chart.
Traders took profit when the relative strength index (RSI) on the weekly chart reached an overbought level, surpassing the value of 70, amid the frenzy of memecoins based on Solana.
An RSI above 70 indicates that altcoins have been overvalued, leading to a trend reversal or corrective pullback.
Altcoins continue to follow a downward trend, as confirmed by the bearish movement of Total3 within this descending parallel channel.
The RSI has fallen from 89 to 62 over the past seven weeks, suggesting that the market may still be bearish.
If Total3 fails to breach the upper limit of the descending channel at $660 billion, it is possible that altcoins, including major memecoins, will continue to suffer losses. other fluctuations in the next weeks.
Trading volume: 81% drop since early March
Weekly memecoin trading volume has been declining since March. According to Dune data, memecoin transactions on all blockchains including Ethereum and Solana, fell by 81%.
Specifically, going from a high of $998.55 million in March to $191.88 million in the week ending May 3. This decline suggests a loss of interest or confidence in the sector on the part of traders.
If we consider the most important memecoins, CoinMarketCap data shows that DOGE trading volume fell by 50% between March 7 and May 6.
Similarly, SHIB and PEPE volumes fell by 88% and 51%, respectively, during the same period.
Furthermore, the recent change in tone of US Federal Reservewith the Federal Open Market Committee’s May 1 statement reducing the likelihood of interest rate cuts in 2024, has increased risk aversion in the cryptocurrency market.
This change had a particular impact on memecoins, which are among the most profitable assets of 2024.
As the US economy appears to be strengthening, traders are turning to safe haven assets like American treasures, preferring them to cryptocurrencies, which do not offer stable returns.
This change in direction reduces the appeal of riskier investments, notably memecoins.
As a result, investors will likely realize profits on memecoins in the first quarter of 2024, reinvesting in other segments of the crypto ecosystem.