The past few months have been an ideal period for memecoins, with the subsector growing faster than any other sector in the crypto industry. However, many of these tokens have now experienced a hard decline, with market data from Dogecoin (DOGE) suggesting that traders have turned bearish.
Dogecoin’s funding rate, which refers to the amount you have to pay to keep the position open, turned negative on June 18 and has remained below zero since then. This is a striking switch, as it only happens rarely, and the last time it occurred was in early May. The funding rate reached a low of -0.0053% on Thursday morning, the lowest value since October 2023.
Dogecoin has fallen by more than 9% in one week, with some traders experiencing the worst day since 2021. The market liquidated more than $62 million in long positions, according to data from CoinGlass. This is a significant loss, especially considering that the token has already lost half its value since its peak.
The memecoin dip was to be expected after the enormous rise of the previous months. The token class has outperformed any other type of token, with an average increase of more than 1300%. This is largely due to the astronomical increases in many newer memecoins, such as Dogwifhat (WIF) and Cat in a Dog’s World (MEW).
However, the decline of memecoins may be a sign that investors are now betting on AI, rather than cryptocurrency. As Stocklytics analyst Neil Roarty told CoinDesk, “If the bitcoin price falls, memecoins not only fall with it, but they fall harder than bitcoin. Further summer memecoin gains may have to wait.”