Meme coin values have risen and fell all across the board in the cryptocurrency market over recent days. Dogecoin and Shiba Inu which are the two popular meme coins that have captured the imagination of the public because of the social media hype and celebrity endorsements have been down significantly for the time that have left the investors wondering if there is something that cause devaluation in this sector.
Top 5 Meme Coins that are Falling
Dogecoin (DOGE)
1. Dogecoin (DOGE):
The biggest meme cryptocurrency by global market cap has seen its price pushed down 6.91% in recent days to trade at $0.171. The plunge by this dog-based meme token mirrors a robust downtrend across the board in the crypto market, with on-chain data that further confirms DOGE’s dip.
It is shown by the Coinglass that the open interest of the DOGE fell by 11.08% and its derivatives volume dropped by 4.49%. These numbers indicate a sharp drop in market activity and interest of investors in the asset. To that effect, the OI-weighted funding rate fell to 0.0234%. In inference, the analysis of the derivatives data took a similar turn to the fall of DOGE.
In contrast, DOGE liquidations surged within the past few days to $9.50 million with long positions at $7.33 million and short at $2.17 million. This further coincided with DOGE’s dip as massive selling pressure pushes the supply of the asset in the market.
Shiba Inu (SHIB)
2. Shiba Inu (SHIB):
Another meme coin, Shiba Inu, also known as the so-called Dogecoin killer, noted a decline of its price by 2.86% in the past few hours and resting at $0.00002672. Positioned as Dogecoin’s best rival, SHIB’s turn to bears rode the waves of the bearish on-chain metrics noted by Coinglass.
Interesingly, SHIB’s open interest tumbled 1.91%, while OI-weighed funding rate remained in bearish momentum at 0.0387%, thus confirming Shiba Inu’s decline. Also, SHIB liquidations were $627.56K, with long positions amounting to liquidations of $296.84K and short liquidations making up $330.72K.
Dogwifhat (WIF)
3. Dogwifhat (WIF):
Dogwifhat, another dog-based meme currency that works on the Solana blockchain, chalked out an attention-nabbing 13.05 percent dip in its price within the last 24 hours to $3.42. This slump in WIF price followed its broader downtrend in the genre of meme coins as on-chain data further attested to the meme coin’s decline in price.
Coinglass exposed an 11.09% drop in WIF’s open interest with its OI-weighted funding rate plummeting to 0.0226%, a bearish market signal for the asset. Backed further by $1.89 million worth of liquidations, of which $1.61 million was in long and $272.96K in short, WIF’s on-chain metrics credit its fall.
Pepe Coin (PEPE)
4. Pepe Coin (PEPE):
A frog-based meme token and first in a list dominated by a pack of dog-based meme coins, PEPE shed 6.71% in the past few hours and trades at $0.0000066. Functioning atop the Ethereum blockchain, even PEPE took a bearish stage, quite depressing in tandem with the token’s on-chain data.
Its open interest slipped around 5.66% and its derivatives volume further plunged by 5.88%, indicating a highly deriving downtrend for the token in the market. In sync with a fallen OI-weighted funding rate at 0.0215% and liquidations worth $2.12 million, PEPE further anchored its bearish turn in the crypto market. Speaking of the same, long positions liquidated were $1.69 million whereas short positions liquidated were $435.97K.
Book of Meme (BOME)
5. Book of Meme (BOME):
Yet another Solana meme coin, Book of Meme, rode on bearish sentiments in the market. The BOME price plummeted 13.50% just within the past few hours to now sit at $0.01374. On-chain data weighing in, mirroring quite the same bearish trend as the meme coins mentioned above in terms of price fall.
Open interest in BOME fell 13.64%, followed by a volume plunge of 2.15%. It would mean an overwhelming decrease in investor interest followed by decreased trading activity for the Solana-based meme token. This further adds to the massive fall of BOME and was further accompanied by $2.13 million in liquidations. Notably, the long positions liquidated $1.83 million while the short liquidations reached $292.17K.
But why is the value of Meme Coins going down? Let’s see the answer in the next section of this article.
The Speculative Nature of Meme Coins
By their very nature, the meme coins are an absolutely speculative investment. Unlike classically built cryptocurrencies with robust blockchain technology and real-world utility, the majority of meme coins are made to either make a joke or ride the waves of internet trends and popular culture.
Given this speculative nature the value of a meme coin thus systematically depends on hype and sentiment rather than on basic or fundamental factors like adoption rate, use cases, or technological advancement. Because of this, it is highly volatile for instance, spikes or sudden crashes are related to the price swings of these coins by far unconnected to the state of progress of the respective undertaking.
Lack of Utility and Real-World Usability
Probably the most reasons as to why the value of meme coins shrinks is the lack of real-world utility and practical application. Although most of the meme coins try to diversify, like some adding decentralized exchanges or even play-to-earn games, the majority of these projects in substance still lack real use cases that would give long term value and adoption.
Meme coin is unable to maintain its momentum and attract investors as it has no clear path to mainstream adoption and real-world utility. As the hype and novelty wane, investors become more selective and seek out something with tangible value propositions.
Higher Regulatory Scrutiny
In particular, the cryptocurrency market has recently been under increased scrutiny from regulators and certainly includes meme coins. Since then, regulators around the world have been raising their voice over concerns pertaining to the risks associated with highly speculative, highly volatile assets, and specifically those that may be used further down the line for market manipulation or fraud.
The increased regulatory environment has come to mean more uncertainty, and hence risk for the investors in meme coins, since it is not clear what the future holds for such assets. Increased regulation in terms of transparency, consumer protection, and anti-money laundering makes the survival of meme coins difficult and their value harder to maintain.
Oversaturation of the Meme Coin Market
The rise of low-cap meme coins has been one of the defining stories of this year for many in the cryptocurrency market with new projects launching on virtually a daily basis and many piggybacking off successful meme assets like Shiba Inu and Dogecoin. This makes oversaturation in the market which leads to growing competition and diluted investor attention and capital.
With more meme coins entering the market, investors become very choosy and discretionary with their investments, moving their capital to those projects that have stronger fundamentals and real-world utility. It may start siphoning money from more speculative and less differentiated meme coins, thus fueling their decline.
Broader Cryptocurrency Market Conditions
The value of the meme coin is heavily influenced by the broader cryptocurrency market conditions. When the overall market turns down then the investors move away from highly speculative assets such as meme coins thus avoiding any risks.
This wider market sentiment can further depress meme coin values as investors chase safer havens or turn their attention to cryptocurrencies that have more established use cases and stronger fundamentals. Because of their correlation, cryptocurrency corrections within the broad market at large can easily burn meme coins.
Conclusion
The decline in value of meme coins can be attributed to a combination of the following factors:
- Their high speculative nature
- Lack of real-world utility
- Increased scrutiny by regulators
- Oversaturation of the market
- General cryptocurrency market conditions
As the hype and novelty surrounding these coins wear off, investors are growing more savvy and seeking cryptocurrencies with real value propositions.
Even as meme coins continue to fascinate the imagination of people and attract speculative investment, their long-term value and viability will be defined by any practical use cases that can be developed along with the capability of their ecosystems to be robust and to sail through an evolving regulatory landscape. Investors have to be extremely careful while looking at meme coins and need an understanding of the risks involved, as their value remains highly volatile and very uncertain.
