Meme coin dominance in altcoin market shrinks, DOGE, SHIB, PEPE, WIF, FLOKI on the verge of correction?

Meme tokens Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), Dogwifhat (WIF), and Floki (FLOKI) have climbed in the past 24 hours. The seven-day returns on these assets remain negative amidst the shrinking dominance of the sector. 

Data from crypto intelligence tracker CryptoQuant shows that meme coin dominance has been in a state of decline for the past two months. 

Meme coin rally could grind to a halt if this happens

In a posting on X, CryptoQuant CEO and co-founder said that meme coin dominance in altcoin markets is declining. The executive believes that crypto Twitter’s attention could shift from gambling to a renewed focus on fundamentals, similar to what was seen in crypto a few years ago. 

The largest meme coin in the crypto ecosystem, Dogecoin, yielded over 50% gains in the last cycle, during the bullrun of 2018. Per a Bloomberg report from the time, Dogecoin’s gains were attributed to the decentralized nature of the meme token. 

In this cycle, market participants have observed the rise of Solana and Base-based meme tokens and celebrity coins, among others. The shrinking dominance is likely indicative of the shift from memes to fundamentally sound assets with a community, utility and a sizeable market capitalization, like assets ranked in the top 100 by market capitalization. 

Market participants misinterpreted Ki Young Ju’s statement as a bearish market outlook. The CryptoQuant CEO clarified his stance and noted that he is long-term bullish on Bitcoin. 

Memes could see correction in prices soon

While memes like DOGE, SHIB, PEPE, WIF, and FLOKI have added value in the past 24 hours, per CoinGecko data, these assets have noted double-digit losses in the past seven days. It is likely that the declining dominance of meme coins result in reduced on-chain activity and the tokens lose relevance among traders. 

Santiment data shows that daily active addresses, a key on-chain metric used to track the relevance of an asset and activity of users, were declining for DOGE, SHIB, PEPE, and FLOKI in the same time period as the shrinking dominance. 

The on-chain metric supports the findings of the CryptoQuant CEO, painting a bearish outlook for meme coins and their performance in the coming weeks. 

Daily Active Addresses of different meme tokens 

It remains to be seen whether the meme coins sustain their recent gains or extend the double-digit losses from the past seven days. Typically, a decline in on-chain activity and demand among market participants could push the assets towards price corrections.