Why are memecoins down today?
2024.08.02 19:20
Dogecoin (DOGE), Shiba Inu (SHIB) and Dogwifhat (WIF) corrected sharply as the entire cryptocurrency market sold-off on Aug. 2.
Data from CoinMarketCap shows that the total market capitalization of memecoins has dropped in the last 10 days, falling 21.5% from $54.70 billion on July 22 to $42.91 billion on Aug. 2.
Memecoin market capitalization and daily trading volume. Source: CoinMarketCap
The total daily trading volume across the memecoin sector has dropped by 21% over the same period.
Mog Coin (MOG) declined the most, losing 12% of its market value over the last 24 hours. Book of Meme (BOME) followed with a 9% loss, and WIF came in third after declining 6% over the same period.
Performance of top-cap memecoins. Source: CoinGecko
DOGE – the largest meme token by market capitalization – saw a 2.5% price decline on the day, bringing its price to $0.1131 with a market cap of $16.43 billion. Notably, DOGE currently accounts for nearly 62% of the memecoin sectors’ total market share.
Its rival, SHIB, was flashing red on Aug. 2, down 2.13% on the day, decreasing its market cap to $8.86 billion to cement its position as the second most popular memecoin.
Weakening altcoin market structure weighs down memecoins
The ongoing pullback in memecoins is part of a correction in TOTAL2 – the total market cap of all cryptocurrencies excluding Bitcoin (BTC) – that began in July 2022.
Data from Cointelegraph Markets Pro and TradingView shows that TOTAL2 has decreased by 13% from a high of $1.031 trillion on July 22 to an intraday low of $942 billion on Aug. 2. This pull-back has led to the appearance of a descending parallel channel on the daily chart, as shown below.
Traders booked profits as the relative strength index (RSI) on the daily chart reached near overbought conditions at 65, suggesting that the altcoins were becoming overvalued, so they embarked on a trend reversal or corrective pullback.
Total crypto market cap excluding BTC. Source: TradingView
Altcoins are still pursuing the downtrend, and the movement of the RSI from 51 to 35 over the last three days suggests that the market conditions favor the downside.
If TOTAL2 fails to rise above the major resistance zone between $976 billion (where the 200-day exponential moving average (EMA) sits) and $1.023 trillion (embraced by both the 50-day and 100-day EMAs), altcoins, including major memecoins, could continue correcting over the next few days.
Related: MEW, WIF and Solana memecoins soar amid increasing network activity
Memecoin trading volumes on the decline
As earlier reported by Cointelegraph, memecoin weekly trading volume has been reducing since early March.
Data from Dune reveals that memecoin transaction flows across all blockchains, including Ethereum and Solana, have dropped collectively by 86% from its recent top of roughly $998.55 million in March to $138.25 million the week ending July 14.
Although the volume picked up the week that followed, rising to $246.5 million between July 15 and July 21, it dropped by 28.8% over the last week to the current volume of $175.3 million. This suggests that traders’ interest or confidence in the sector has waned lately.
Memecoins total trading volumes. Source: Dune
Looking at individual memecoins, historical data from CoinMarketCap shows that DOGE’s trading volume dropped by approximately 41% between July 22 and Aug. 2. Similarly, SHIB’s and Pepe’s (PEPE) trading volumes have plummeted by 23% and 19% over the same period.
Meanwhile, market news, such as the failure of approximately 99% of all memecoins on Pump.fun – a Solana memecoin creation tool – to launch, has added to the bearish sentiment in the memecoins sector.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
