Solana, PEPE, SHIB and BITCOIN show shifting trader sentiment, meme coins overtake large caps in volatility
- Bitcoin trading volume has declined consistently as meme coins PEPE, Shiba Inu, HarryPotterObamaSonic10Inu catch traders’ attention.
- Meme coins have outperformed large market capitalization assets like Bitcoin and Ethereum, as speculative assets yield higher gains for traders.
- Analysts argue that meme coin price rallies represent a top signal for the overall sector and traders need to be cautious.
Analysts at crypto intelligence tracker, Santiment, noted a shift in trader sentiment over the past week. Meme coins have decoupled from crypto markets temporarily, offering gains to holders, unlike large market capitalization assets in the ecosystem.
On a 30-day timeframe, tokens of most projects suffered a decline, with Shiba Inu (SHIB), Pepe (PEPE), and HarryPotterObamaSonic10Inu (BITCOIN). These meme coins have overtaken Bitcoin and Ethereum in volatility and this is considered a top indicator for the overall crypto market. Still, analysts at Santiment warn traders to be cautious.
Meme coins steal the spotlight, signal market top
At the time of writing, Bitcoin price is back below the $30,000 mark and most large market capitalization projects are on a steady decline. Interestingly, meme coins like PEPE, SHIB and BITCOIN stand out as exceptions and offered gains to holders in the 30-day timeframe.
30-day timeframe returns on crypto projects in top 100 as seen on Santiment
There has been a notable decline in trade volume and fatigue seems to have gripped crypto traders. However, this is limited to the largest assets in the ecosystem. Traders have shifted their focus to PEPE, BITCOIN, and there is a change in behavior towards speculative assets.
Solana, PEPE, SHIB and BITCOIN show speculative asset gains as seen on Santiment
Historically, a rally in meme coins is a signal of a market top in the overall crypto ecosystem, however, there is no guarantee that this will be the case in the ongoing cycle. As traders engage in trading speculative assets on exchanges, there is a slight bias towards highly volatile assets and this could support the theory of a downturn in crypto prices in the near future.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
