From being the market’s biggest bulls during the up-only trend, meme coins have now turned into the biggest bears as the broad crypto sector takes a hit.
Market leaders Bitcoin and Ethereum fell hard over the last week, and as of writing, BTC is trading at $26,069 while ETH is exchanging hands at $1,665. The total crypto market cap has also fallen, now stuck at $1.093 trillion.
And when it comes to Bitcoin, its 14-day relative strength index (RSI) shows extreme oversold conditions as it drops well below 30, the lowest point since the March 2020 crash. This rapid price drop doesn’t mean an impending bullish reversal, though the market sentiments have turned bearish, and the downturn is expected to persist. In fact, Bitcoin’s drop below its 200-week and 200-day moving averages could very well see the crypto asset going under $25k in the near future.
JPMorgan’s latest research report shows that falling prices have also pushed Bitcoin miners into new business areas, including offering high-performance computing (HPC) services to the fast-growing AI market to reduce their dependence on crypto. It added that these miners are partially funding the cost of their new investments by selling coins in recent quarters.
As for Ethereum, co-founder Vitalik Buterin deposited 600 Ether, worth about $1 million, to crypto exchange Coinbase.
In the stablecoin market, the total capitalization holds steady at just over $124 billion. However, the past 30 days have seen a dip in circulation: USDT by 1.2%, USDC by 3.3%, and DAI by 6.5%, according to CoinGecko.
Meanwhile, this week, Coinbase acquired a minority stake in Circle after their Centre Consortium, which governed the USDC stablecoin, was dissolved, and Circle is bringing the stablecoin fully in-house. Also, six new blockchains will integrate with USDC, taking the total supported blockchains to 15. Just last year, Circle sold stakes to raise $400 million from BlackRock and Fidelity Investments.
Now, talking about meme coins, they are having some of the worst times. In the past week, while the losses of Bitcoin are currently around 11.1% and Ether’s 9.4%, the top meme coins fell even harder, as evidenced by the 15.2% drop in Doge’s value, 22% in SHIB, and 23% by Floki during this time period.
This shows that while meme coins have been all the rage in the bull market, that’s not the case in a bear market.
The total meme market cap has also dropped by 3.0% in the last 24 hours to stand at $14.9 billion. Meme tokens comprised around 1.37% of the crypto market cap in August 2023.
Now, let’s look at top meme coins and how they are performing in the currently turbulent market.
Dogecoin Sees a Lot of On-chain Movement
The original meme coin, Dogecoin (DOGE), is having a really bad time this year as it trades in the range of $0.01 and 0.05. Last Thursday, DOGE’s price fell to as low as $0.0565 but has since recovered to now trade at $0.0629. But despite the rebound in prices over the weekend, the RSI has been below the neutral 50 mark on the 4-hour chart, meaning another move downward is not out of the picture.
With these latest losses, the $8.84 billion market cap coin is down 10% year-to-date and 5% over the past year. The meme coin is also down a whopping 91.4% from its all-time high (ATH) of $0.73.
Doge was founded as a joke back in late 2013, and now ten years later, it is the biggest meme coin by market cap, accounting for 59% of the meme coin market. Created by Billy Marcus and Jackson Palmer, it was based on the long-running Doge meme, which originated with a picture of a Shibu Inu dog. It’s also one of the few meme coins with its own blockchain based on the proof-of-work (PoW) consensus algorithm – similar to Bitcoin but has an inflationary design and unlimited supply.
Dogecoin has received tremendous support from its community, especially after Tesla and SpaceX CEO Elon Musk started advocating for the project. A representative of his, alongside Vitalik Buterin, is part of the Dogecoin Foundation and supposedly working toward improving Dogecoin altogether.
The recent breakdown in Doge prices came in tandem with the broad crypto market. This drawdown sent more than half of the Dogecoin addresses in losses. Despite this, the count of Dogecoin addresses continues to exhibit steady growth, with an average of approximately 4.81 million addresses holding DOGE over the past 30 days. In addition, the count of active addresses within the Dogecoin network and new Dogecoin addresses has been surging in double-digit percentages.
When it comes to Dogecoin’s ownership distribution, retail investors possess over a third of the total tokens, while a group of 74 significant investors collectively own around 21.4% of the token supply. Notably, nine addresses classified as “whales” collectively control about 43.93% of the Dogecoin supply.
Most recently, the blockchain tracking and analytics tool Whale Alert reported a huge transfer of 253.4 million DOGE from Robinhood to an unknown wallet. In a separate transaction, 84.8 million DOGE was moved into the Robinhood platform simultaneously. The retail trading platform holds more than 38 billion DOGE, worth about $2.5 billion, which makes for 27% of the total DOGE in circulation. However, this balance is spread out over ten different wallet addresses inside Robinhood.
Amidst the heightened volatility, Dogecoin lead developer, Mishaboar expressed his doubts about a possible move to a Proof-of-Stake (PoS) blockchain consensus. According to him, the transition is not a “sensible approach,” and he said that if the conversion pulls through, he may leave Dogecoin for another cryptocurrency network with a PoW consensus.
Talking about his concerns regarding this transition, Mishaboar highlighted the possibilities of power imbalances since exchanges control a significant amount of a cryptocurrency’s supply. This way, a PoS consensus could increase the control and influence of exchanges over a network, he said, further noting that this may also lead to Dogecoin facing increased regulatory challenges.
The developer further stated that most cryptos that have transitioned to a PoS consensus have been failing considerably or becoming so centralized that it contradicts their foundational structure, i.e., decentralization. On top of it all, it doesn’t align with Dogecoin’s futuristic goals and objectives, said Mishaboar, adding PoS benefits could also be easily achieved with other solutions, such as integrating multiple payment channels.
Click here to learn all about investing in Dogecoin (DOGE).
Shiba Inu Reflects Shibarium’s Volatile Launch
Another popular meme coin, SHIB, is the 15th largest cryptocurrency with a market cap of $4.7 bln, a significant drop from its 2021 high of $70 billion. During this recent market volatility, the price of SHIB dropped 15%. However, SHIB was experiencing a decline days before that. On Aug. 12, SHIB went on to hit $0.0000112 after rallying about 40% in just over a week, and on Monday this week, it fell to $0.00000782. This drop represents more than a 30% loss in SHIB’s value over a period of ten days.
As of writing, SHIB has been trading at $0.00000798, down 1.35% in 2023 so far and 28% over the past year. The meme coin is also down 90.69% from its peak.
While the ongoing negative market sentiments certainly played a part in SHIB’s decline, it was more than just this. A big reason for this price performance has been an underwhelming launch of Shibarium, the Ethereum-based layer-2 blockchain of the Shiba Inu network.
The price initially rallied on the anticipation surrounding the Shibarium launch as well as the project’s attempt to shed the meme coin reputation and introduce a new identity protocol for all the apps on the ecosystem for increased privacy and security. The Self-Sovereign Identity (SSI) is a model for managing digital identities in which individuals or businesses have sole ownership over the ability to control their personal data and accounts.
After months of waiting, the much-hyped Shibarium was launched last week, which didn’t go as expected.
The L2 solution stands out for its innovative consensus mechanism, Proof-of-Participation (PoP), which chooses validators based on their crypto holdings. However, its launch faced challenges, particularly with the bridge, leading to $1.7 million in Eth becoming unrecoverable on Shibarium. Moreover, the Shibarium Remote Procedure Call (RPC) interface, crucial for network interactions, also appears to be malfunctioning.
In response, the Shiba Inu team posted a blog, noting the issues at the time of launch were due to the massive influx of users and transactions. Due to unanticipated high traffic, operations on the chain were halted, and now Shibarium is reportedly making its way toward a public relaunch tomorrow.
“After two days of testing and tweaking parameters to achieve a ‘ready’ state, Shibarium is now enhanced and optimized,” said Shiba Inu’s lead developer, Shytoshi Kusama, on Tuesday. He further noted that while still undergoing testing, the network is “producing blocks.” To tackle the problem of high traffic, the Shibarium team has now integrated advanced safety features that cover “a new monitoring system and additional fail-safes including rate limiting at the RPC level and auto server reset.”
Kusama shared in the announcement that additional validators will also go live to provide BONE holders more options to stake their coins for a share in the rewards earned.
An abridged version of the “SHIB Paper” has also been unveiled, which introduces the “Shiba Inu state” concept, defining it as a digital utopia for collective prosperity as well as points to the global problems solved by the Shiba state, including data privacy concerns and centralization of power and wealth.
Click here to learn all about investing in Shiba Inu (SHIB).
Floki Focuses on Flagship Utility Product
Now comes the $180 million market cap of Floki Inu, inspired by a tweet from Musk, where he mentioned naming his Shiba Inu puppy Floki.
The meme coin is currently trading at $0.00001815, showing an impressive gain of more than 125% YTD and 73.3% over the past year. However, FLOK has seen a sharp decline of 94.6% from its all-time high (ATH).
Unlike Dogecoin, but similar to Shiba Inu, Floki seeks to be more than just a meme coin. Their ecosystem boasts a FlokiFi Locker DeFi platform, a Shop Floki NFT marketplace, and a metaverse game named Valhalla. Recognizing the growing gaming and crypto interest in China, they specifically targeted this market with a Chinese version of Valhalla.
Earlier this year, in addition to the Valhalla game launch, Floki partnered with the Chinese crypto social media platform Btok for promotions, a FLOKI airdrop, and to feature the company’s Bored Ape Yacht Club NFT (BAYC #7537).
A few months ago, the team unveiled an updated roadmap, showcasing their plans to roll out native payments, a referral program, burn functionality, lock extension, and support for V3 Positions LPs as key enhancements to the FlokiFi Locker.
With an emphasis on enhancing the utility of the FLOKI token, the team plans to launch Valhalla on the mainnet this year, introducing an in-game economy called ‘Open World.’ This system will incorporate the native token, enabling Play-to-Earn opportunities and Battle Arenas. With the launch of Valhalla on the mainnet, the team’s goal is to significantly boost the demand and functionality of the FLOKI token.
Click here to learn all about investing in Floki Inu (FLOKI).
Concluding Thoughts
As we have seen, the entire market is down, but meme coins are taking an especially hard hit as capital retreats from high-risk assets.
Following the rise of Dogecoin, there’s been a surge in the creation of cryptocurrencies, leading to a proliferation of meme tokens. These tokens, centered around Internet memes and often lacking real value, not only rally significantly during bull markets but also see steep drops in bear markets, as is currently the case.
The behavior of meme coins mirrors the broader crypto market’s cycle. If the market’s resilience is any indication, meme coins, too, will endure and possibly rebound when market conditions change.
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