Memecoins are currently underperforming the crypto market, which may suggest that traders will prioritize BTC and ETH
Memecoins, including Dogecoin DOGE
$0.12, Shiba Inu SHIB$0.000018, and Pepe PEPE$0.000011, are examples.
These are among the cryptocurrencies that underperformed the market on June 18, indicating a shift from the trajectory that propelled the sector upwards last week.
The total market capitalization of memecoins has decreased by 11% to $45.31 billion in the past 24 hours, according to data from CoinMarketCap. The intensity of the sell-side pressure is indicated by the 79% increase in the daily trading volume to $6.25 billion.
Dogwifhat (WIF) experienced the greatest decline among the top-cap memecoins, losing 14.55% of its market value in the past 24 hours. Brett (BRETT) was the third-place finisher, with a 13% decline over the same period, while Book of Meme (BOME) followed with a 14.3% loss.
On the daily chart, the leading memecoins DOGE and SHIB experienced a decline of 11.4% and 11.5%, respectively, while PEPE experienced a drop of 10%.
Let us examine a few reasons why memecoins are plunging in value today.
Market Structural Deterioration
From a historical standpoint, the bull market is typically driven by retail investors, who redirect capital from large-cap cryptocurrencies such as Bitcoin (BTC) $64,754 and Ether (ETH) $3,418
Into alternative cryptocurrencies. Nevertheless, the total market cap of all cryptocurrencies, excluding BTC and ETH, Total3, which had previously surged to $720 billion on June 5, has since retreated in response to the current correction in memecoin prices.
The chart below illustrates that Total3 has experienced a 19% decline since then, reaching $582.88 billion at publication. A descending parallel channel has emerged on the daily chart due to this pullback, as illustrated below.
Following a rally in Ethereum-based memecoins that saw PEPE reach new all-time highs, traders recorded profits as the daily relative strength index (RSI) retreated from the overbought region just before crossing 70.
The altcoins entered a trend reversal or corrective pullback when their RSI reading approached 70, indicating they were becoming overvalued.
From a technical standpoint, altcoins are still trapped in a protracted downtrend, as evidenced by Total3’s downward movement within a descending parallel channel.
The RSI’s value has fluctuated from 62 to 30 in the past two weeks, indicating that the bears control the market.
Altcoins, including significant memecoins, may continue to decline over the next few days if Total3’s price does not surpass the middle boundary of the declining channel at $600 billion.
The Transaction Volume of memecoin is Decreasing
Dune Analytics data indicates that memecoin transactions across all blockchains, including Ethereum and Solana, have collectively decreased by 97% from their March apex of approximately $996.7 million to $30.35 million in the week ending June 14. This implies that merchants’ confidence or interest in the sector has persisted.
DOGE’s trading volume decreased by approximately 41% between April 17 and June 17, as indicated by historical data from CoinMarketCap for individual memecoins. Concurrently, the trading volumes of SHIB and PEPE have declined by 68% and 34% during the same period.
The memecoin collapse is accompanied by significant crypto liquidations.
The ongoing crypto market drawdown has resulted in the liquidation of over $434 million in leveraged positions within the past 24 hours, according to futures market data from CoinGlass. Most liquidations across memecoins comprised over $60.22 million in DOGE longs and over $22.6 million in SHIB longs.
Similarly, over $4.4 million in PEPE and $2.3 million in WIF longs were liquidated during the same time frame.
The largest single liquidation on Binance, which involved an ETH/USDC trade worth $6.44 million, occurred over the last 24 hours, with over 160,826 traders liquidated.
When long derivative positions are liquidated without purchasing pressure from the trading volume, crypto prices, including memecoins, are adversely affected.