Memecoins Underperform Market as Crypto Sector Sees $434M in Liquidations
Summary:
Cryptocurrencies known as memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), have been underperforming the market as of June 18. The total market cap of memecoins has fallen by 11% to $45.31 billion in a single day. Despite a rising daily trade volume, majority of the activity is from sellers. Among the top memecoins, Dogwifhat (WIF) dropped the most, decreasing 14.55% of its market value in one day. The ongoing downturn in the crypto market has wiped out over $434 million in leveraged positions within the past 24 hours, with memecoins accounting for a significant proportion of this.
Cryptocurrencies known as memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), have been underperforming the market on the 18th of June, deviating from the momentum that previously buoyed the sector. Based on the figures from CoinMarketCap, the overall market cap for memecoins has dwindled by 11% to reach $45.31 billion within a day. Despite the increasing daily trade volume of 79% to $6.25 billion, this was mainly fueling seller activity. Among the top memecoins, Dogwifhat (WIF) plummeted the most, dropping 14.55% of its market value within a day. Book of Meme (BOME) wasn’t far behind, diminishing by 14.3% while Brett (BRETT) lost 13% over the same time period.
Major memecoins DOGE and SHIB indicated a drop of 11.4% and 11.5% respectively on the daily chart, and PEPE suffered a dive of 10%. Let's understand the factors leading to this memecoin plunge today.
Typically, the rise in the bull market is spearheaded by minor investors, as capital flows from prominent cryptocurrencies like Bitcoin (BTC) and Ether (ETH) to altcoins. However, the downward correction in memecoin values has caused TOTAL3 (the total cap of every cryptocurrency apart from BTC and ETH) to recede after rising to $720 billion on June 5.
A descending parallel channel has emerged on the daily chart as TOTAL3 has slumped by 19% to $582.88 billion since then. Traders started taking profits when the daily relative strength index (RSI) veered away from the 'oversold' territory, before touching 70, after PEPE’s rally to new all-time highs. The RSI score near 70 implied that the altcoins were overpriced thus, a trend reversal or correction ensued.
From a technical viewpoint, altcoins remain trapped in an extended downward trend, affirmed by TOTAL3’s southward motion within a descending parallel channel. In the past fortnight, the RSI value has shifted from 62 to 30, signaling a bearish market.
If TOTAL3 is unable to break through the middle limit of the downward channel at $600 billion, altcoins, and key memecoins might continue to slump in the coming days.
The weekly trade volume of memecoins has been on a nosedive since the beginning of March. Figures from Dune Analytics disclose that the transactions of memecoins across every blockchain, including Ethereum and Solana, have plunged collectively by 97%, from about $996.7 million in March to $30.35 million in the week ending June 14, indicating dwindling interest or faith in this sector.
Juxtaposing individual memecoins, historical data from CoinMarketCap reveal that the trade volume of DOGE dispensed by almost 41% between April 17 and June 17. Likewise, the trade volumes of SHIB and PEPE plunged by 68% and 34% respectively over the same timeframe. The current crypto market setback, as evidenced in data from Coinglass, has wiped out over $434 million in leveraged positions in the past day, with DOGE longs exceeding $60.22 million and SHIB longs over $22.6 million accounting for most liquidations across the memecoins.
Over the same period, more than $4.4 million PEPE longs and $2.3 million WIF longs were liquidated. Over the past day, 160,826 traders have been liquidated, the largest being a single liquidation on Binance for an ETH/USDC trade valued at $6.44 million. The reduced buying pressure due to long derivative positions being liquidated without trading volume support negatively impacts crypto prices, including those of memecoins. Please note, this article does not offer investment advice or recommendations. Every investment and trading decision entails risk, and readers should independently research while making choices.
Published At
6/18/2024 5:59:07 PM
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