Memecoin liquidity has doubled from the year's beginning despite this trend, hitting a record high of $128 million in early June. Even in the face of diminishing dominance, this spike in liquidity points to a nuanced shift in market attitude.
The on-chain analytics company CryptoQuant's data reveals that memecoins are steadily losing value in the altcoin market. The CEO and founder of CryptoQuant, Ki Young Ju, emphasized on X (formerly Twitter) the notable decline in memecoin dominance between September 2022 and May 2024.
Memecoin dominance in alt markets is declining.
— Ki Young Ju (@ki_young_ju) June 19, 2024
CT would be shifting from gambling to focusing on fundamentals, similar to a few years ago.
Pack it up lads, it’s over. pic.twitter.com/H5d81mRIJB
There was an initial peak in November 2022, reaching about 0.075, and then a gradual fall that stabilized at 0.045 in early 2023. The ratio fluctuated slightly throughout 2023 but usually trended lower, averaging approximately 0.04 by the beginning of 2024. Beginning in March 2024, there was a noticeable drop, and by May of that same year, the dominance ratio had dropped below 0.03. According to analysts, this change is comparable to past trends in that it reflects a move away from speculative trading and toward a focus on fundamentals.
Memecoin liquidity and market performance
On the other hand, the liquidity of the memecoin market has increased dramatically. Tokens such as Dogwifhat (WIF), Memecoin (MEME), and Book of Meme (BOME) have seen liquidity rise of 200% to 4000% in native units. According to CoinGecko, the average price rise of memecoins in Q1 2024 was 1,313%, greatly surpassing the 286% growth in the real-world assets (RWA) sector.
This increase is further shown by Kaiko's 1% market depth statistic, which shows that memecoin market liquidity hit an all-time high of $128 million in early June. Significant sell-offs have followed the recent dramatic decline in memecoin values, which is indicative of the deteriorating attitude in the market. This tendency was also seen in the larger cryptocurrency sector, as the total market capitalization fell below $2.4 trillion.
Additionally, the market worth of memecoin dropped to $49.9 billion from earlier this year's highs of over $68 billion.
Notwithstanding these adjustments, 2024 saw some noteworthy occurrences, including the Solana(SOL) memecoin mania, which was sparked by increased institutional interest and the adoption of Bitcoin (BTC) spot exchange-traded funds (ETFs). Memecoin saw spikes because to positive sentiment, but investor retreat from these risky assets was caused by low volumes or unfavorable macroeconomic circumstances.
Analyst insights on memecoin trends
Recently, cryptocurrency analyst Altcoin Sherpa discussed his opinions on X in relation to the current memecoin super cycle. He thought about the past trends of memecoins, such as Dogecoin (DOGE), which have frequently seen sharp declines after periods of rapid expansion, just to repeat the cycle.
In the past, large currencies, mid-caps, and memes would circulate through the market, frequently indicating the conclusion of a cycle. Sherpa thinks this altered in 2024, though. In contrast to past cycles, memecoins have surpassed even very promising tech projects to take the lead in the cryptocurrency space. Sherpa agrees that memes will always be relevant in the market because at least one memecoin has demonstrated a steady increase in value. He does, however, stress that for extended periods of time in 2024, the memecoin industry as a whole has outperformed other industries.
Notwithstanding their widespread appeal, Sherpa also emphasized the dangers of memecoins, including as their susceptibility to insider trading and high fraud potential. These elements may have a negative effect on market dynamics. However, he supports the inclusion of memecoins in investing portfolios that are diversified. The dominance of memecoins in the altcoin market is waning, but institutional and retail interest is still driving the sector's appeal and liquidity.
This pattern points to a nuanced market behavior that will shape the future of cryptocurrency investing by combining speculative trading with fundamental analysis.
Disclaimer: This website's information is not meant to be used as investment advice. Investing is a risky endeavor. Investing involves a risk to your capital.
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