Analysts Uncover Reasons Behind Meme Coin Decline

The meme coin segment is experiencing a capital outflow amid the growth of the global cryptocurrency market, reports The Block.

According to CoinGecko, the market capitalization of meme coins has decreased by 2.4% in the past 24 hours, now standing at $22.6 billion. Meanwhile, the total cryptocurrency market capitalization has risen by 0.7%, reaching $2.1 trillion.

Analysts at Nansen attribute this to investors shifting their focus to Bitcoin and Ethereum.

“The reliance of meme coins on social media trends and limited fundamental indicators further exacerbates this effect,” they stated.

Over the past week, major meme coins such as Bonk, Pepe, and Shiba Inu have fallen by 15%, 3%, and 2.5% respectively. During the same period, Ethereum has increased by more than 5%.

Bitcoin’s dominance currently stands at 48.9%, while Ethereum’s is at 17.2%.

Ruslan Lienkha, Head of Markets at YouHodler, explains the interest in leading coins by the influx of institutional capital through Bitcoin ETFs and the anticipation of a potential approval of an Ethereum ETF.

“Additionally, meme coins are currently extremely illiquid and volatile. A significant portion of the cryptocurrency market is still struggling with poor liquidity,” added Lienkha.

The expert emphasized that the current bullish growth is structurally different from the 2021 frenzy. He noted that today’s cryptocurrency market is “segmented due to more rational capital allocation.”

Last week, meme coins were showing positive dynamics.

Earlier, ForkLog reported that the owners of 12 wallets earned over $1.3 million from a Pump & Dump scheme with the new meme coin dogwifhat on the Ethereum network.