Endless Meme Rally? Experts Warn of Bubble Burst

Despite a correction in major cryptocurrencies, the meme token sector is showing positive momentum. Leading the growth are WIF and BOME, though some analysts fear an imminent dump.

The Meme March

The market capitalization of all meme coins has exceeded $55 billion, increasing by about 8% in the past day. Clear leaders have emerged in this trend.

The coin dofwifhat (WIF) on the Solana platform is showing strong dynamics, having increased by 44% over the past week. At the time of writing, the asset is trading at $3.15.

WIF’s capitalization is about $3.1 billion, placing the token in the top 50 and fourth in the meme category.

The coin has gained popularity since December 2023, largely due to a strong community. Previously, project supporters managed to raise 690,000 USDC to display the project’s mascot on the “Sphere” in Las Vegas.

Another favorite is Book of Meme (BOME), also on the Solana network, launched via a pre-sale model. Since its listing on Binance on March 16, the token’s price surged 457 times to $0.026886.

However, the asset’s price has now fallen to $0.012, and its capitalization plummeted to $800 million.

The popularity of meme tokens has spurred growth in the “parent” blockchain coins. SOL rose by 37% over the week, while AVAX increased by 34%.

Meanwhile, meme coins on Ethereum are showing weaker dynamics compared to assets on competing networks due to higher fees.

Alongside the ETH correction, one of the main meme coins on the network — Shiba Inu (SHIB) — fell by 20% over seven days. During the same period, PEPE dropped by 21%.

The largest meme token by capitalization, Dogecoin (DOGE), declined by 18% alongside Bitcoin, despite recent promotion by billionaire Elon Musk.

Potential Risks

In the medium term, the hype around meme coins shows no signs of abating, reports Bloomberg citing a report from Kaiko. Currently, trading volumes are at levels last seen shortly before the crypto market downturn over two years ago.

The figure reached $80 billion for the first time since October 2021. Meanwhile, the dynamics of this class of cryptocurrencies surpass more traditional digital assets.

“Historically, the rise of meme tokens has often signaled a market peak. However, it’s hard to predict if this is true now, as new capital enters the crypto markets. We also observe that some of these tokens are increasingly dependent on specific factors and less correlated with Bitcoin,” analysts stated.

Experts noted that investors view such coins as an opportunity for quick profit. In fact, they have no intrinsic value, the company pointed out.

This view is shared by Franklin Templeton, whose researchers previously warned about the instability of meme tokens.

Kaiko also highlighted the issues of low liquidity in these coins:

“This makes it difficult to reflect the real execution price. For example, if you see a meme coin with a market capitalization supposedly at $1 billion, it’s very unlikely anyone could sell such a volume without significantly impacting the quotes.”

A trader known as CoinMamba pointed out another issue. In his view, worthwhile crypto projects wait a long time for exchange listings, undergoing a selection process, while meme tokens are added very quickly.

There are many decent projects that devs have been working hard for several years but can’t get listed on Binance or Bybit. But it takes a day for a shiny new memecoin to get listed. Shameful behavior by exchanges..

— CoinMamba (@coinmamba) March 18, 2024

“There are many decent projects that developers have been working hard on for several years, but [they] can’t get listed on Binance or Bybit. But it takes a day for a new meme coin to get listed. Shameful behavior by exchanges,” he emphasized.

Earlier in March, Solana was flooded with celebrity meme coins with spelling errors like Jeo Boden, Danold Tromp, and Olen Mosk. Experts explained this FOMO by the low transaction fees on the network.

Analysts at K33 Research saw the meme coin rally as a sign of an emerging altseason.