The market capitalizations of memecoins on Solana and Coinbase’s Ethereum layer-2 Base have experienced a significant decline in the past 24 hours, with a drop of 12% and 19% respectively across the two networks.
This decline in memecoins coincided with a sharp decrease in the price of Bitcoin (BTC), which fell by 4.94% in the past day, according to CoinMarketCap data.
According to one crypto analyst, it is common for memecoins to plummet when the price of BTC falters. However, another analyst believes that the bearish trend is due to the humor of memecoins running its course.
Mati Greenspan, a crypto analyst and founder of Quantum Economics, stated, “I guess it stopped being funny. Pretty fitting that the top came in on April Fool’s day. There is too much value on memecoins, it’s gotta end at some point, it can’t keep going forever.”
The market capitalization of memecoins on Solana currently stands at $8.29 billion, representing a 12% decrease in the last 24 hours, according to CoinGecko. The leading Solana-based meme token, dogwifhat (WIF), saw a 9% decline in market cap, amounting to a loss of $3.9 billion. WIF still accounts for nearly half of the total memecoin market share on Solana.
On eight major crypto exchanges, WIF has a total of $484 million in open interest, but $2.76 million in leveraged positions have been liquidated in the past day, as per CoinGlass data. This includes $1.89 million in short positions and $872,460 in long positions.
The total market cap of Base dropped by 19% in the past 24 hours to $1.47 billion. The native token of the new Layer 3 network called “Degen” (DEGEN) on Base suffered the most, experiencing a 26.14% decline in market cap to $436.5 million.
The total crypto market cap, which represents the value of all assets in the crypto sector, has also seen a 6.14% decrease in the past day, currently standing at $2.45 trillion, according to CoinMarketCap data.
Greenspan suggests that while Bitcoin is finding strong support levels, memecoins are experiencing fluctuations beyond critical key price points. He added, “Bitcoin retracement is minuscule at the moment, memecoins are getting slaughtered.”
Bitcoin’s price dropped by 4.94% in the past day to trade at $65,910, while WIF’s price dropped by 10.3% to $3.67.
Greenspan believes that Bitcoin has a strong correlation with other cryptocurrencies in the wider market, stating, “It has directional correlation, when Bitcoin is up, they go up more, and when Bitcoin is down, they go down more than Bitcoin. This will hold up for a very long time.”
Charles Edwards, the founder of Capriole, a quantitative Bitcoin and digital asset fund, shares a similar view. He believes that memecoins like these tend to experience double the impact of Bitcoin’s downturns.
Ran Neuner, a crypto analyst and host of the Crypto Banter podcast, suggests that the memecoin market is approaching oversaturation.
Overall, the decline in memecoins on Solana and Base, along with the drop in Bitcoin’s price, has had a significant impact on the crypto market.