Memes are the leitmotif of this cycle. WIF and PEPE had a glorious time together, constantly setting records and creating climaxes. However, with DeFi and other fundamental narratives regaining dominance, is the game over for memes? Let's find out through several indicators.
Memes dominate
In the current cryptocurrency cycle, Memes is undoubtedly one of the focuses. Although Memes’ dominance in the major altcoin markets has declined recently, it does not mean that the Memes game is over. From many perspectives, the Memes market still has its unique vitality and potential.
“Pack up, guys, it’s over,” said CryptoQuant’s Ki Young Ju.
What does Duck think?
The analyst who goes by the pseudonym DonAlt, who has accurately predicted market bottoms and tops in the past, by being contrarian, doesn’t really like memes. Despite his extreme opposing views, he still maintains the same opinion. Regarding WIF, he recently said: “It looks terrible. No matter how you say I’m biased, a down is a down.”
He did enjoy profits from his short position when the coin began to plummet. However, he has since exited the market, claiming that he did not want to “kill” the coin. Prevention is always better than cure, and it doesn’t hurt to be warned not to be targeted by “Moon Boy,” right?
Despite DonAlt’s extremely bearish stance, he did not rule out the possibility that Meme could rise again. If Bitcoin eventually reverses its trend, Meme will follow.
However, if the bear market comes again, then meme holders will have to fasten their seat belts. In the words of DonAlt: "I don't disagree with this. If Bitcoin breaks out of the range and goes up, your meme will perform well, but it will be very cruel in the tail market."
Enter Solana
Most of the memes pushed offshore in this cycle are based on Solana. In fact, the number of coins minted on this chain has surpassed other chains such as BNB, Ethereum, and Polygon.
If one were to make a comparison, it would not be a stretch to claim that Ethereum’s NFT dominance in the last cycle was replaced by Solana’s Memes dominance in this cycle. In fact, it became the chain of choice for retail and Memes traders this cycle.
A recent report from Pantera Capital states: “Solana accounts for 85% of all new tokens appearing on DEXs by May 2024, up from 50% a year ago. The growth of Solana-based tokens reflects its dominance in retail usage, driven by memecoin activity.”
As the memes craze fades, will Solana suffer? To a certain extent, yes. However, Solana does have fundamentals to fall back on.
Several consumer-facing applications, DePin projects, content distribution applications, CLOB-based DEXs, and gaming applications are being built on the blockchain. So even if Memes takes a break, Solana is not going to be left alone.
According to Pantera Capital, Solana’s future is undoubtedly secure. Solana’s monolithic architecture has a product roadmap that focuses on optimizing each component of its own blockchain, similar to Apple’s approach to its vertically integrated hardware and software stack in macOS.
It’s the season for “debate”
Political and financial memes are expected to take center stage again later this month, as the debate between U.S. President Joe Biden and presidential candidate Donald Trump will air on June 27.
Podium positions and the order of closing statements have been determined by a coin toss. As debate day approaches, volatility is expected to increase in the political finance memes basket, including Jeo Boden [BODEN], Doland Tremp [TREMP], Super Trump [STRUMP], MAGA [TRUMP], and others.
Analysts at Bitfinex say capital gains tax discussions in general and cryptocurrency tax policy in particular could have a significant impact on the market. “Political finance” tokens may experience significant market volatility based on the performance of these tokens during and after the debate, as the tokens themselves become speculative assets regarding election outcomes,” they said.
Therefore, the memes season is not over yet and we can expect the market to experience an influx of volatility in the period leading up to November.
Memes Liquidity
Despite the decline in dominance, it is worth noting that the liquidity of Memes is currently at its peak. According to Kaiko data, the 1% market depth of DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic recently created a new all-time high of $128 million.
As a rule of thumb, the higher the liquidity, the healthier the market, as large trades can be executed without fear of price being affected. Looking back, this has tightened the bid-ask spread. However, the transaction costs of memes remain high. On most exchanges, the bid-ask spread is over 2 basis points, which supports the above narrative. Kaiko’s report states: “While more market makers are trying to provide liquidity for these tokens, they are still considered riskier due to their high volatility.”
This isn’t a “magic trick” situation. Market participants haven’t stopped trading memes entirely. They’re just trading them with caution. The continued influx of liquidity despite the drop in dominance suggests this group of tokens isn’t being abandoned.
The rule is to never get married to your memes, always remember they can go south. Play with fire like a trader, but make sure you keep the profits in your hands and don’t burn your fingers.
