Meme coins suffer huge crash after impressive rally

Crypto market experiences high losses following Bitcoin's crash.
Popular meme coins see double-digit losses on Tuesday.
The meme coins category is down nearly 17% in the past 24 hours.

Double-digit losses in large-cap meme coins have caused the entire meme coin category to crash by about 17% in the past 24 hours. The recent decline follows new market dynamics that have disrupted traders' expectations following anticipation of the Bitcoin halving.

Crypto market crash follows new market dynamics

In the past 24 hours, the crypto market experienced a significant downturn as Bitcoin's price plummeted to approximately $65,500, triggering a massive $484.48 million liquidation across the entire market.

Despite anticipating a bull run leading up to Bitcoin's halving – expected to happen later this month – the recent price movements of top altcoins and the frenzy surrounding meme coins have created an unexpected dynamic characterized by what some call a "weird bull market." Zach Rynes, a member of the Chainlink community, highlighted this unusual trend in an X post on April 1st, stating, "The market skipped a couple steps that we have seen with previous cycles, BTC-> straight to meme coins is a bit unusual."

I think most people would agree this bull market has been weird

BTC performance has been clearly supercharged by the ETF launch, injecting liquidity into the space

But liquidity that has flowed directly to memecoins ?

The market skipped a couple steps that we have seen with…
— Zach Rynes | CLG (@ChainLinkGod) April 1, 2024

Furthermore, Bitcoin reached an all-time high pre-halving for the first time, fueled by the introduction of spot Bitcoin ETFs. With these developments in play, traders are adjusting their strategies by taking profits from Bitcoin and reallocating funds into meme coins.

Also read: JUP up 21% in 24 hours as Dexlab integration may fuel more meme coin frenzy

Meme coins crash after impressive rally

This shift in market dynamics has led to an impressive rally in meme coins since the beginning of March. From well-established meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) to newly launched ones such as Pepe (PEPE), dogwifhat (WIF), Book of Meme (BOME), Slerf (SLERF), and Degen (DEGEN), the entire meme coin category has seen gains ranging from 100% to 1000%. However, while these high returns may be enticing, they also come with risks, as demonstrated by the recent market correction.

Following Tuesday's downturn, most of the top meme coins experienced double-digit losses, with DOGE down 11.6%, WIF down 14.1%, PEPE down 14.7%, and FLOKI down 12%. This shows that meme coins are often highly affected by a market setback in the same way they largely benefit during bull markets.

These losses contributed to a nearly 17% decline in the overall market capitalization of the meme coin category in the past 24 hours, coming just one day after surpassing the $70 billion mark.

In other developments, BitMEX co-founder Arthur Hayes recently suggested that meme coins, beyond their speculative purposes, could play a role in attracting developers' attention to the underlying blockchain networks they operate on.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.