Memecoins
Bitcoin above $64,000: here is the impact on memecoins like Dogecoin and Shiba Inu
- The overall memecoin market collapsed, led by DOGE, SHIB, and PEPE.
- Technical analysis shows potential further declines for the altcoin market.
The cryptocurrency market has seen significant fluctuations recently, with meme coins experiencing a period of crisis notable decline.
These whimsically themed cryptocurrencies, often inspired by Internet memes and jokes, have seen a collective reduction in market capitalization to $54.5 billion, a decline of 3.3% in just the past day.
Despite their typically volatile nature, the decline was sharp and mainly influenced by major players such as Dogemoneta [DOGE], Shiba Inu [SHIB]AND Pepper [PEPE].
After a period of strong growth, in which Dogecoin, for example, rose by 9.8% last week, together with PEPE it faced a decline of more than 4% in a single day.
Shiba Inu, on the other hand, has seen a steady decline over the course of the week, culminating in a 4.5% decline yesterday.
This series of declines has sparked conversations and concerns regarding the sustainability of meme coins in a bear market.
However, while the price action could lead Shiba Inu as the reddest among the top 3 meme coin markets, AMBCrypto recently reported that a projection of $0.000031 being the immediate target for SHIB should the bulls prevail.
The change in the memecoin market is coming
The decline in memecoin values coincides with a broader decline in their trading volumes.
Second Dune analysismemecoin transaction volumes in major blockchains such as Ethereum [ETH] AND Solana [SOL] have collapsed dramatically.
Source: Duna
From a high of nearly $998.55 million in March, weekly trading volume incredibly dropped to just $1.6 million on May 6.
This sharp reduction indicates a significant decline in trader interest and confidence in these digital assets.
Looking more closely, individual meme coins have mirrored this trend.
Dogecoin’s trading volume, for example, has halved by 50% over the past two months, while Shiba Inu and PEPE have seen their volumes decline by more than 80% and 50%, respectively.
This overall market behavior reflects broader investor disinterest.
Implications for the broader cryptocurrency market
The downturn in meme coins could be the precursor to broader market challenges. Traditionally, bull markets in the cryptocurrency space are often driven by a surge in altcoin activity.
However, the recent overall decline suggests that bearish trends may continue to dominate the broader cryptocurrency landscape.
In technical terms, the TOTAL3 chart: the total market capitalization of all cryptocurrencies excluding Bitcoin [BTC] and Ethereum, demonstrated multiple downside structural breaks.
This indicates a possible prolonged bearish phase for altcoins.
Source: TradingView
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Additionally, the altcoin market recently tested a significant supply zone on the 6-hour chart, marked by a shooting star followed by an engulfing candlestick pattern closing below the shooting star.
This pattern suggests that the altcoin market may continue to experience downward pressure until a swing bottom is cleared, thus, a potential upside reversal may be possible.