Home Business Memecoins are performing moderately in the crypto market, possibly a good sign

Memecoins are performing moderately in the crypto market, possibly a good sign

Memecoins are performing moderately in the crypto market, possibly a good sign

A good indicator of the state of affairs in the crypto market is the performance of memecoins. When memecoins perform well, it is a sign of extremely high optimism and the presence of private investors in the market. For example, during the previous bull market peak, we saw astronomical rallies in Dogecoin (DOGE) and Shiba Inu (SHIB), among others.

However, memecoins are currently performing significantly worse than the big boys like Bitcoin (BTC) and Ethereum (ETH). The total market capitalization of the memecoin sector is currently around $22.4 billion. The three largest memecoins are DOGE, SHIBA and BONK.

Memecoins are lagging behind

The prices of these three tokens have been significantly in the red over the last week. BONK even fell by more than 14 percent last week. Ethereum, on the other hand, rose about 5 percent last week. According to an analyst at Nansen, memecoins are performing relatively poorly as tokens like Ethereum are currently in the spotlight and consuming a lot of capital.

“Memecoins’ underperformance is likely due to the current strength of key crypto assets such as Ethereum. This attracts investor attention and keeps capital away from memecoins. Their reliance on social media trends and limited core qualities compound this effect.”

As mentioned earlier, memecoins were very popular in the previous bull market. The situation is currently completely different. According to YouHodler’s Ruslan Lienkha, the launch of Bitcoin ETFs and the potentially upcoming Ethereum ETFs are contributing to this.

Private investors are not back yet

Big and “smart money” is currently dominating the crypto market. Memecoins are particularly interesting for private investors who want to make money quickly at very high risk.

Data from Coinbase confirms that retail interest in cryptocurrencies is currently relatively low. For example, in the fourth quarter of 2021, when Bitcoin reached its all-time high of $69,000, monthly private trading volume was $177 billion. In the current quarter, private trading volume on Coinbase is just $39 billion.

If the popularity of memecoins is an indication of an overheated crypto market, we are still a long way from it. Private investors are still relatively cautious. All in all, the current rise of the crypto market still appears to be relatively sustainable and is driven primarily by institutional capital flows, particularly into Bitcoin and Ethereum.

No Comments

Leave A Reply

Please enter your comment!
Please enter your name here

Exit mobile version