3 Reasons Why DOGE, WIF and Other Memecoins Are Crashing
DOGE
$0.19055
+0.19%
$3.5091
+0.80%
$0.00000688
+0%
Memecoins like Dogecoin (DOGE), Dogwifhat (WIF), and Pepe (PEPE) are among the worst-performing cryptocurrencies today, highlighting a noticeable waning of the earlier enthusiasm that propelled the sector.
Top memecoins' hourly, daily, and weekly price performance. Source: CoinMarketCap Pre-halving correction fractal
Prima facie, the decline across the top joke cryptocurrencies is part of a pre-halving dump across the crypto market.
Top digital assets, including Bitcoin (BTC) and Ether (ETH), have recently pulled back from their yearly highs as traders secure profits ahead of the Bitcoin Halving 2024, prompting similar strategies in the memecoin sector.
That is akin to how memecoins reacted ahead of Bitcoin's previous halving in May 2020, with DOGE's price dropping by over 22.5%.
DOGE/USD daily price chart. Source: TradingView
There exists a strong positive correlation between Bitcoin and top memecoins. For instance, BTC's daily correlation coefficient versus DOGE was 0.82, showcasing strong possibilities of DOGE's price trends mirroring BTC's in the coming days.
BTC/USD's daily correlation versus DOGE/USD, SHIB/USD, PEPE/USD, and WIF/USD. Source: TradingView
Steno Research projects that Bitcoin may experience a pattern similar to its 2016 halving. It anticipates a continuation of selling pressure for up to four months following the halving. This "sell-the-news" mood is further depreciating memecoin sector valuations.
Memecoin trading volumes are crashing
The memecoin sector's correction accompanies strong declines its weekly trading volumes, according to data resource Dune Analytics.
Notably, the memecoin transaction flows across all blockchains, including Ethereum and Solana, have dropped collectively by 88% from its recent top of roughly $1 billion. This suggests that traders' interest or confidence in the sector has waned lately.
Memecoins total trading volumes
