Memecoins Experience Sharp Decline Amid Broader Market Sell-Off
Memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Dogwifhat (WIF), have recently seen significant price corrections. This downturn reflects a broader sell-off in the cryptocurrency market that began on August 2. Data from CoinMarketCap indicates that the total market capitalization of memecoins has plummeted by 21.5% over the past ten days, falling from $54.70 billion on July 22 to $42.91 billion on August 2.
The daily trading volumes across the memecoin sector have decreased by 21% during the same period. Mog Coin (MOG) has been the hardest hit, losing 12% of its market value within the last 24 hours. Book of Meme (BOME) followed closely with a 9% loss, while WIF declined by 6%.
Dogecoin and Shiba Inu Lead the Market Decline
DOGE, the largest memecoin by market capitalization, experienced a 2.5% price drop, bringing its value to $0.1131 and reducing its market cap to $16.43 billion. DOGE now accounts for nearly 62% of the total market share within the memecoin sector. SHIB also faced a downturn, decreasing by 2.13% and lowering its market cap to $8.86 billion.
Weakening Altcoin Market Structure
The ongoing decline in memecoins is part of a broader correction in the altcoin market, which excludes Bitcoin (BTC). Data from various market analysis platforms shows that the total market cap of all cryptocurrencies excluding BTC (known as TOTAL2) has fallen by 13%, from a high of $1.031 trillion on July 22 to an intraday low of $942 billion on August 2. This decline has resulted in the formation of a descending parallel channel on daily charts.
Traders have been booking profits as the Relative Strength Index (RSI) on daily charts approached overbought conditions at 65. This indicates that altcoins, including memecoins, were becoming overvalued, prompting a trend reversal. The RSI has since moved from 51 to 35 over the last three days, suggesting that market conditions favor continued downside movement.
Memecoin Trading Volumes on the Decline
Reports indicate that memecoin trading volumes have been decreasing since early March. Data from Dune Analytics shows that memecoin transaction volumes across all blockchains, including Ethereum and Solana, have collectively dropped by 86%, from approximately $998.55 million in March to $138.25 million by the week ending July 14. Although there was a slight uptick in volume between July 15 and July 21, rising to $246.5 million, it has since declined by 28.8% to $175.3 million in the last week.
Historical data from CoinMarketCap shows that DOGE’s trading volume fell by approximately 41% between July 22 and August 2. Similarly, SHIB and Pepe (PEPE) experienced declines in trading volumes of 23% and 19%, respectively.
Market News and Sentiment
Recent market news has also contributed to the bearish sentiment surrounding memecoins. For instance, approximately 99% of all memecoins created using Pump.fun, a Solana-based memecoin creation tool, failed to launch successfully. This has further dampened trader confidence in the sector.
As the market continues to correct, it remains crucial for investors to conduct their own research before making any trading decisions. The volatile nature of the cryptocurrency market means that risks are always present.
In conclusion, the recent downturn in memecoins like DOGE and SHIB reflects broader market trends and declining trading volumes. While the market may continue to face challenges, staying informed and conducting thorough research can help investors navigate these turbulent times.
