In the volatile realm of cryptocurrency, meme coins have taken a significant hit recently. Fartcoin, a prominent meme coin within the Solana ecosystem, has plunged by 16.8%, emerging as one of the biggest decliners. Floki has retreated by 4.5%, Shiba Inu has plummeted 6.5%, and other top laggards in the meme coin space include Brett, Mog Coin, and Popcat.
The only major meme coin in the green is PENGU, which has risen by 6% as total sales skyrocketed by 127% in the last 24 hours, reaching $6.1 million. Several factors have contributed to the widespread decline of meme coins. Firstly, the risk – off sentiment pervading the crypto industry has led to a general drop in most coin prices. Bitcoin has fallen to $95,000, and the total market capitalization of all coins has dipped to $3.32 trillion. Historically, altcoins, especially the highly volatile meme coins, tend to experience sharp drops when Bitcoin is underperforming.
Secondly, the Christmas holiday has significantly reduced liquidity in the crypto market. Data indicates that most cryptocurrencies are witnessing low trading volumes as a large number of investors and traders are on holiday. For instance, Bitcoin’s 24 – hour volume on Thursday was $33.96 million, the lowest since November 3rd. Floki’s 24 – hour volume stood at $238 million, its lowest in over a month. Fartcoin had a volume of $187 million, and Shiba Inu’s volume was $576 million. With limited volume, cryptocurrency prices are prone to substantial fluctuations in either direction.
Thirdly, investors are cashing in on their profits. Many meme coins experienced substantial increases throughout the year. Floki reached a peak of $0.0002885 in November, which was 200% higher than its August low, and Shiba Inu climbed to $0.000033. This profit – taking behavior is putting downward pressure on meme coin prices.
Finally, concerns about the Federal Reserve’s stance are also having an impact. The Fed has hinted at only two interest rate cuts in 2025, a relatively hawkish position. This has pushed bond yields higher, with the 10 – year yield moving to 4.63%, the 30 – year to 4.8%, and the 5 – year to 4.50%. As bond yields rise, cryptocurrency prices, along with stocks, often tend to decline.
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