Within the crypto sector, it is clear that memecoins will not completely disappear. However, recently, the trading activity and overall market value of memecoins are decreasing.
Although some “anomalous” coins have managed to stay afloat, most memecoins are struggling to keep up with the recent market change.
It seems that investors are shifting their attention, and their money, towards more established assets like Bitcoin and Ethereum. Let’s see all the details below.
Crypto news: trading activity and the overall value of memecoins are decreasing
As anticipated, recently, cryptocurrencies like Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) have had lower performances compared to the rest of the market.
Showing a reversal of trend compared to the enthusiasm that had characterized the sector previously.
According to data from CoinGecko, the overall market capitalization of memecoins has decreased in the last 24 hours, recording a 2.7% decrease and reaching 55.48 billion dollars.
Among the coins that have suffered the biggest losses, Bonk (BONK) has dropped by 6% in the last day. Floki (FLOKI) has lost 3.3%, while Memecoin (MEME) ranked third with a 3% decrease in the same period.
DOGE, the leading meme coin by market capitalization, has seen its price drop by 2.1% in one day, bringing its overall value to 22.74 billion dollars.
Despite the drop, DOGE continues to represent almost 41% of the overall market of memecoins.
Even its main competitor, SHIB, experienced a decline on May 6, with a loss of 2.4% that reduced its market capitalization to 14.29 billion dollars. This consolidation firmly keeps it as the second most popular memecoin.
Even altcoins are falling: the persistent decline after the memecoin boom
Historically, bullish cryptocurrency markets tend to be driven by a boom in altcoins.
However, in line with the current correction of memecoin prices, even Total3, the total market capitalization of all cryptocurrencies excluding Bitcoin and Ether, has suffered a setback after the rally that started in October 2023.
Specifically, Total3 has dropped by 15% since the first week of April, reaching 661.41 billion dollars. This decline has led to the formation of a descending parallel channel on the weekly chart.
Operators took profit when the Relative Strength Index (RSI) on the weekly chart reached an overbought level, exceeding the value of 70, in the midst of the frenzy of memecoins based on Solana.
An RSI above 70 indicates that altcoins were overvalued, leading to a trend reversal or corrective pullback.
Altcoins continue to follow a downward trend, as confirmed by the downward movement of Total3 within this descending parallel channel.
The RSI has dropped from 89 to 62 in the last seven weeks, suggesting that the market may still be bearish.
If Total3 fails to break through the upper limit of the descending channel at 660 billion dollars, it is possible that altcoins, including major memecoins, will continue to experience further fluctuations in the coming weeks.
Trading volume: 81% decrease since the beginning of March
The weekly trading volume of memecoins has been declining since March. According to Dune data, memecoin transactions on all blockchains, including Ethereum and Solana, have dropped by 81%.
Specifically, going from a peak of 998.55 million dollars in March to 191.88 million dollars in the week ending on May 3rd. This decrease suggests a loss of interest or confidence in the sector by traders.
If we consider the most important memecoins, CoinMarketCap data shows that DOGE’s trading volume has dropped by 50% between March 7 and May 6.
Similarly, the volumes of SHIB and PEPE have dropped by 88% and 51% respectively in the same period.
Furthermore, the recent change in tone of the US Federal Reserve, with the statement from the Federal Open Market Committee on May 1st reducing the likelihood of interest rate cuts in 2024, has increased risk aversion in the cryptocurrency market.
This change has had a particular impact on memecoins, which have been among the most profitable assets of 2024.
With the US economy seeming to strengthen, traders are shifting towards safe-haven assets like US Treasuries, preferring them over cryptocurrencies, which do not offer stable returns.
This change in direction reduces the attractiveness of riskier investments, including memecoins.
As a result, investors are likely taking profits from memecoins in the first quarter of 2024, reinvesting in other segments of the crypto ecosystem.
