Meme Coins Outperform BTC, ETH, and SOL as Traders Rotate Holding
The $53 billion meme coin industry surged more than 12% on Tuesday with coins like pepe (PEPE) and dogwifhat (WIF) surging 22% and 25% respectively, data from CoinGecko showed.
The $53 billion meme coin industry surged more than 12% on Tuesday with coins like pepe (PEPE) and dogwifhat {{WIF}} surging 22% and 25% respectively, data from CoinGecko showed.
The rally comes after bitcoin (BTC) rallied to a one-month high of $65,000 before falling back to $63,000. The continued strong performance of meme coins suggests traders are taking profits from higher-cap assets like BTC and ETH and diversifying those profits into more speculative bets.
The CoinDesk 20 Index (CD20), a measure of the performance of large-cap tokens, is up 2.3% over the past 24 hours.
Several meme coins based on U.S. politics have been launched after presidential candidate Donald Trump was injured in a shooting at a rally in Pennsylvania on Saturday. Coins like America Coin (USA) and Super Trump (STRUMP) have surged 204% and 43% respectively since the shooting.
Due to their different liquidity levels, meme coins tend to perform well during periods when BTC and ETH are hovering around local highs and underperform when the broader market is in a bear market. For example, Dogwifhat gained more than 60% in May while BTC was trading between $66,000 and $69,000.
WIF then lost 60% of its value in the next 30 days following a market crash that saw BTC drop 21% in the same time frame.
BTC's current market depth — a measure of liquidity — on Binance ranges from $14.8 million to $11.2 million, within 2% of current levels. However, WIF's market depth ranges from just $1.4 million to $1 million, meaning a flood of liquidations and market orders has the potential to move meme coins like WIF much further than larger tokens like BTC and ETH.
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