Memecoins market capitalization exceeds $50 billion, above NFTs, DeFi sector
- Meme coins are on a tear after eight months of consolidation, posting double-digit gains amid a growing correlation with Bitcoin.
- Given the sector’s highly speculative nature with little usability, getting out in time looks key.
- Memecoins and BTC liquidity could rotate back into quality altcoins, with some like Polkadot waking up.
Meme coins are the current mania in the market, with sector tokens posting double-digit gains, which is well above the gains seen in other sectors. It comes after eight months of horizontal consolidation, from April 2023 into the beginning of 2024. However, with the Bitcoin (BTC) season peaking, growing consolidation has Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), and Floki Inu (FLOKI), among others, mooning.
Meme coins market capitalization dominates
The fear of missing out (FOMO) continues to drive the meme coin market as sidelined, and late investors do not want to miss the rally. One analyst on X, @Coinmamba, however, likens investing in meme coins to the modern-day Ponzi, noting, “It only works until you run of greater fool to buy.”
Memecoin investing is like a modern version of ponzi. It works until you run of greater fool to buy. So keep doing whatever you’re doing but make sure to get out in time..
— CoinMamba (@coinmamba) March 2, 2024
What was supposed to be a Bitcoin season, amid halving-related hype and the ongoing exchange-traded funds (ETFs) euphoria, has turned out to be also the season of meme coins. This is with good reason, as the correlation between BTC and the main meme coin, Dogecoin, continues to grow. Correlation data shows a current 87% relationship, according to IntoTheBlock.
BTC correlation matrix
This means that as Bitcoin price moves towards its $69,000 peak, meme coins are also rallying, only with greater percentage gains. CoinMarketCap data shows an aggregate market capitalization for the meme coin category at $51.61 billion, marking a 17% growth on the day. With the total crypto market capitalization surpassing $2.5 trillion, numerous meme coins are emerging as notable winners, flourishing and exceeding the market capitalization of decentralized finance (DeFi) and non-fungible token (NFT) sectors.
Meme coins pumping brings retail back
A popular trader and analyst on X, @milesdeutscher, notes that with meme coins pumping, retail is steadily flocking to the scene. This is likely because of FOMO, as they do not want to be left behind, adding that “This is obviously bullish for prices overall.”
This meme coin pump and "old" coin pump is bringing a lot of retail back into the market.
— Miles Deutscher (@milesdeutscher) March 4, 2024
This is obviously bullish for prices overall.
But it's also reflexive.
Price goes up > retail comes back > retail buy "old" coins that pumped last bull/meme coins etc.
Take note.
This explains why the likes of Polkadot (DOT) price are waking up, reclaiming the $10.00 threshold, levels last seen in May 2022. When the meme coin mania climaxes, the liquidity could rotate into quality altcoins with strong fundamentals.
Meanwhile, Linda P. Jones, voice behind the “3 Steps to Quantum Wealth: The Wealth Heiress' Guide to Financial Freedom by Investing in Cryptocurrencies" audiobooks ascribes what is happening in the meme coin market to three things:
- Capital from hedge funds flowing into meme coins, where she cited reports from an unmentioned hedge fund manager.
- Meme coins providing greater percentage gains than Bitcoin, in the sense that a range move in BTC is exaggerated when it comes to meme coins.
- Amid expectations of intense crypto regulation in 2025, this could be the final year for meme coins.
“The profits this year will soar, then they will fade away like the dot coms did,” Jones says, adding, “They were fun and lucrative while they lasted.”
As of press time, Solana-based meme coin, Bonk Inu (BONK), is the biggest gainer among the meme coin top ten. This is likely because of the network’s [Solana] affordable gas fees relative to its industry peer, Ethereum.
let's face it, meme coins are just more fun on solana.
— 0xMQQ° (@0xMQQ) March 4, 2024
paying high gas for a swap is like, you are killing a game and you arrive at the boss room, then boom a full screen pop-up in your face saying you need to pay $69.99 to continue. it just kills the vibe.
BONK/USDT, PEPE/USDT, DOGE/USDT, WIF/USDT, SHIB/USDT, FLOKI/USDT
Also Read: PEPE price rallies 26% on Monday, likely driven by whale accumulation
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
