With the resurgence of DeFi and other fundamental narratives, has the season of Memecoins come to an end? In this article, we will analyze several indicators to find out.
Memes have been the dominant theme of this cycle. WIF and PEPE have had a glorious time, constantly setting records and reaching new heights. However, with DeFi and other fundamental narratives taking over, is the game over for Memes? Let’s explore this through several indicators.
In the current cryptocurrency cycle, Memes are undoubtedly one of the focuses. Although Memes’ dominance in the major altcoin market has declined recently, it does not mean that the game for Memes is over. From multiple perspectives, the Memes market still possesses its unique vitality and potential.
Ki Young Ju from CryptoQuant says, “Pack up, folks, it’s over.”
DonAlt, an analyst who has accurately predicted market bottoms and tops in the past, doesn’t really like Memes. Despite his extreme opposing views, he maintains the same perspective. Regarding WIF, he recently said, “It looks terrible. No matter what bias you think I have, a downtrend is a downtrend.”
He did enjoy the profits from shorting the coin when it started to plummet. However, he has exited the market, claiming that he doesn’t want to “kill” the coin. It’s better to be cautious than sorry, and there’s no harm in avoiding being a target of the “moon boys,” right?
Although DonAlt holds an extremely bearish position, he does not rule out the possibility of Memes rising again. If Bitcoin eventually achieves a trend reversal, Memes will follow.
However, if a bear market comes again, Memes holders will have to fasten their seatbelts. As DonAlt puts it, “I’m not against it. If Bitcoin breaks out of its range, your Memes will perform well, but it will be brutal in a bearish market.”
Most of the Memes that have been pushed to the forefront in this cycle are based on Solana. In fact, the number of coin minting on this chain has surpassed other chains like BNB, Ethereum, and Polygon.
Comparatively, it wouldn’t be an exaggeration to claim that the dominance of Ethereum NFTs in the previous cycle has been replaced by the dominance of Solana Memes in this cycle. In fact, for retail traders and Memes traders, this has become the preferred chain of this cycle.
A recent report from Pantera Capital states, “By May 2024, Solana will account for 85% of all new tokens appearing on DEX, up from 50% a year ago. The growth of Solana-based tokens reflects its advantages in retail usage under the drive of memecoin activities.”
Will Solana be affected as the Memes frenzy gradually dissipates? To some extent, yes. However, Solana does have fundamentals to rely on.
Several consumer-facing applications, DePin projects, content distribution applications, CLOB-based DEX, and gaming applications are being built on this blockchain. So, even if Memes take a temporary break, Solana won’t be left behind.
According to Pantera Capital, Solana’s future is undoubtedly secure. Solana’s monolithic architecture has a product roadmap that focuses on optimizing every component of its blockchain, similar to Apple’s approach to its vertically integrated hardware and software stack in macOS.
Political finance Memes will once again take the spotlight at the end of this month. The debate between President Biden and presidential candidate Trump will be broadcasted on June 27.
The stage positions and the order of statements have already been decided by a coin toss. With the debate approaching, it is expected that there will be increased volatility in the political finance Memes basket, including Jeo Boden [BODEN], Doland Tremp [TREMP], Super Trump [STRUMP], MAGA [TRUMP], and others.
Analysts from Bitfinex state that general capital gains tax discussions and especially cryptocurrency tax policies may have a significant impact on the market. They say, “During and after the debate, ‘political finance’ tokens may experience significant market volatility based on the performance of these tokens, as they have become speculative assets related to election outcomes.”
Therefore, the Memes season is not over, and we can expect an influx of volatility in the market until November.
Although their dominance has declined, it is worth noting that Memes’ liquidity is currently at its peak. According to data from Kaiko, the 1% market depth of DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic recently reached a historical high of $128 million.
Based on experience, higher liquidity indicates a healthier market as it allows for large transactions to be executed without impacting the price. However, the transaction costs for Memes are still high. On most exchanges, the bid-ask spread is over 2 basis points, supporting the aforementioned statement.
Kaiko’s report states, “While more market makers are attempting to provide liquidity for these tokens, they are still considered high-risk due to their high volatility.”
This is not a “magic trick” situation. Market participants have not completely stopped trading Memes. They are just trading cautiously. Despite the decline in dominance, liquidity is still being injected, indicating that this group of tokens has not been abandoned.
The rule is to never “marry” your Memes and always remember that they can quickly plummet. Play with fire like a trader, but make sure you have profits in your hands instead of burning your fingers.
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