The Decline of Memecoins: Underperforming the Rest of the Crypto Market
The market cap of memecoins has experienced a decline in the past 24 hours, while the overall cryptocurrency market has seen gains. According to CoinGecko data, the current market cap of memecoins stands at $22.6 billion, reflecting a decrease of 1.8%. In contrast, the global cryptocurrency market cap has reached $2.08 trillion after a 2.1% increase within the same timeframe.
Nansen analysts believe that the underperformance of memecoins can be attributed to the strength of core cryptocurrencies like Ether, which are attracting investor attention and capital away from memecoins. Additionally, memecoins’ reliance on social media trends and limited fundamentals exacerbate this effect.
Major Memecoins Experience Decline
In the past week, popular memecoins such as Bonk, Pepe, and Shiba Inu have seen declines of 14%, 5%, and 2% respectively. Meanwhile, core cryptocurrencies like Ether have increased by over 7%. Bitcoin’s dominance in the crypto market currently stands at 48.8%, with Ether’s dominance at 17.3%, according to Coingecko data.
Investor Focus on Spot ETFs
Investors are primarily interested in Bitcoin and Ether due to institutional inflows through approved and potential spot ETFs. YouHodler Chief of Markets Ruslan Lienkha explains that “Bitcoin ETFs and the possible approval of Ether ETFs are stimulating capital inflow mostly into these two coins.” Lienkha views memecoins as highly illiquid and volatile assets, with a significant portion of the crypto market still struggling with poor liquidity.
According to Lienkha, the current bull run differs structurally from the crypto market hype in 2021. The market is now segmented by smarter capital distribution, where memecoins are considered highly illiquid and volatile. This shift can be observed through lower retail trading volume on Coinbase compared to the levels seen during the late 2021 bull run.
Coinbase retail trading volumes by quarter. Image: Coinbase.
Hot Take: Memecoins Struggle in a Shifting Crypto Landscape
The decline of memecoins in the face of a growing cryptocurrency market highlights the challenges these assets face. As core cryptocurrencies like Bitcoin and Ether gain institutional support and attention, memecoins struggle to compete due to their reliance on social media trends and limited fundamentals. The underperformance of memecoins serves as a reminder that the crypto market is evolving and becoming more discerning in its investment choices.
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