Is extreme profit-taking in Memecoin a sign of a crypto bubble?
Memecoin's popularity, with a market capitalization of $60 billion, has led to concerns that a "bubble is forming in the cryptocurrency market". On Thursday, Bloomberg reported that Memecoin's weekly trading volume is approaching $80 billion, the most since October 2021. The fact that popular, speculative, and volatile memecoins like Dogwifhat and Pepe are outperforming bitcoin is also fueling the bubble thesis. In a recent week, the top memecoins saw nearly $80 billion in trading volume, the highest since October 2021, according to crypto data analytics firm Kaiko.
"Historically, surges in meme tokens have often signaled market peaks," said Desislava Obert, an analyst at Kaiko, adding that "with new capital entering the crypto market, it's hard to predict whether past patterns will repeat themselves." "We are seeing some tokens being driven by individual factors and becoming less correlated to bitcoin," Obert added. Pepe, a frog-themed token, and Dogwifhat, a dog in a top hat, hit new all-time highs last week. The total market value of the meme coin sector surpassed $60 billion last Wednesday, according to CoinGecko. Memecoin is a longstanding phenomenon in crypto. Small investors and marketers have capitalized on it as a lucrative opportunity.
Thomas Perfumo, Head of Strategy at Kraken, pointed out that "the price of MemeCoin often does not reflect the realizable price. For example, let's say there is a MemeCoin with a market capitalization of $1 billion. It's very unlikely that you could cash out all of that MemeCoin for $1 billion without affecting the price.
However, the MemeCoin fandom is not afraid of big events to keep the price of the coin up and the momentum going. Some Dogwifhat token holders announced a public fundraising campaign last week to bring Dogwifhat memes to the Las Vegas Strip. The group raised $650,000 in USDC stablecoin and reached their goal. It is still unclear when the funds will be used to promote the Dogwifhat meme in Las Vegas.
