Memecoins
Floki, Dogwifhat, and Pepe Lead Memecoin Rally Along with Ethereum ETF Approvals
So called memecoin have rallied in the last week and among the five cryptocurrencies that have gained the most are four Solana-based tokens. Floki leads the way (+35%), followed by dogwifhat (32%), Pepe (27%) and Bonk (22%), according to CoinGecko data from Tuesday morning. Bonk reached highs of $0.00004387, narrowly missing the all-time high of $0.00004547 in March.
The price surges overlap with those of the Securities and Exchange Commission green light for eight spot Ether listed fundswith companies like Black rockGrayscale and Fidelity, among the filers. Memecoin, considered the riskiest and most rewarding part of the cryptocurrency industry, often witness notable price swings during a crypto-friendly news cycle. In contrast, Ether has risen a modest 2% since Thursday’s approvals, trading at $3,847 on Tuesday morning.
ETF endorsements have “people bullish on the far edges of the monetary space,” Derek Horstmeyer, a finance professor at George Mason University, told Fortune.
In fact, Google Trends data shows that search interest in “Ethereum” over the past 12 months is near all-time highs, and memecoins are “strongly driven” by this kind of market attention, says Pat Doyle, blockchain researcher at Amberdata.
“The theory is that when money flows into the ecosystem through ETFs, it often trickles down to these smaller projects,” Jonathan Bixby, president of Phoenix Digital Assets, told Fortune. Memecoins have surged recently because of their “small cap” compared to other cryptocurrencies, he says.
Memecoins occupy only a fraction of the market capitalization of major currencies: Floki boasts a market capitalization of just $2.9 billion, compared to Ethereum’s $460 billion, according to data from CoinGecko. In other words, Bixby suggests that fringe coin investors could anticipate a rising tide effect that will lift all boats once ETFs begin trading.
However, BitGo CEO Matt Ballensweig told Fortune that he doesn’t attribute the recent growth of some memecoins to ETF approvals or a single event, but it’s “a sign that momentum across other layer-1s (like Solana) continues to stay strong.”
He added: “Solana has essentially cemented itself as the chain with the most ‘speculative fun’ as traders continue to bet on memecoins on decentralized exchanges.”
One of the reasons Ether has shown minimal price movement since Thursday is likely because, so far, the SEC has only approved Forms 19b-4. These initial documents submitted by prospective issuers allow the securities to be listed on the stock exchange. But for trading of the financial instruments to begin, the SEC must subsequently approve the issuers’ S-1 filings. These forms describe to potential investors and the SEC the structure of the asset, how it will be managed and, in this case, how it intends to reflect the performance of the underlying asset: Ether tokens.
“We do not recall any time when there were unapproved S-1s after 19b-4 approval. I don’t think there is a precedent,” Eric Balchunas, senior ETF analyst at Bloomberg, already told Fortune. He estimated that the forms would take about two weeks to approve.