The current cryptocurrency market cycle is experiencing a severe correction, driven in large part by memecoin mania and spot Bitcoin ETF hype.
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On May 1, economist and trader Alex Krüger shared his thoughts on a rather strange cryptocurrency market cycle.
He observed that meme coins, along with Bitcoin, dominated the narrative after the ETF launch.
However, most of them have now abandoned or gone to zero, with memecoin scams thriving on Solana and Al-Qaeda networks.
Nonetheless, he said before adding that the large-cap meme coin “has been one of the strongest performers this year, showing significant returns despite the correction.”
“Memecoins have become a viable asset class in their own right.”
Some thoughts on the current crypto cycle#1The crypto cycle is almost entirely driven by Bitcoin ETFs#2ETH has been a big disappointment, but it’s generally doing well for stakers and airdrop farmers#3Solana becomes the chain of choice for… — Alex Krüger (@krugermacro) May 1, 2024
Meme Coin Madness
According to Coingecko, the total market capitalization of all memecoins is about $46 billion, which is more than the combined total of Ripple (XRP) and Cardano (ADA). They account for about 2% of the total cryptocurrency market.
However, Krüger observed that there was a dark side to the craziness as the market “began to become flooded with scam memecoin launches and cash-grabbing founders around February.”
“These founders are focused on making a quick buck and short-term hype, not longevity.”
They have also sparked a split in the cryptocurrency community, with some arguing that they bring value to the ecosystem and the opposing view that memecoins undermine the ideals and purpose of cryptocurrency.
The trader also said that there is “hardly any new retail coming into the crypto space.” It’s mostly ETF buyers and “previous cycle participants redeploying and moving out of the risk curve.”
Depression
Cryptocurrency market sentiment has fallen sharply, with Bitcoin correcting 23% yesterday to below $57,000.
However, this pullback was expected. It has happened many times before, and it could easily be as low as 30%. Fellow trader Bob Loukas sees the irony in this.
Re-login to see sentiment. Good Maxi's last 9 months. "ETF bro, never pullbacks. Only upside. Maxi said today - "30% pullbacks are normal in a bull market". Never gets old. Expect more weakness May 16-20."
