Source: Research, CoinMarketCap
Meme tokens posted massive gains earlier this year, inspired by Tesla CEO Elon Musk - touted dogecoin, which released a four consecutive months of victories . in April, the price of dogecoin rose 528.4% on the Hong Kong-based crypto exchange FTX, according to TradingView.
Following the dogecoin phenomenon, de many meme coins were released, including the doge-imitator shiba inu token , as a new obsession with meme culture around the world sparked a wave of interest in tokens. The GameStop stock trading mania earlier this year only has fueled the frenzy.
"The market [meme token] is getting safecured of unnecessary coins, "said Vetle Lunde, analyst at Arcane Research.
While there are countless other dog-themed coins listed like dogelon mars (ELON), and doggy (DOGGY), the area was not limited to aspiring dogecoin. There was also CUMROCKET (CUMMIES), a token that powers a non-fungible token market for the loser coin (LOWB), a token representing a culture of self-mockery in China.
"I think this highlights the aggressive nature of the risk flow that prevailed during this period" Denis Vinokourov, head of research at Synergia Capital, said. "The fundamentals per se didn't matter or matter less to some extent, and in the end it became a very crowded dynamic trade. "
This momentum appears to have worn off. Data compiled by research shows dogecoin was already in the red in May, while tokens even more small ones were showing gains. A month later, however, almost all of CoinMarketCap's 10 meme tokens turned around and followed the pack leader by posting negative returns in June.
Doge's price is down 35.3% in July so far, according to TradingView and FTX, indicating that the No.1 token by market cap is likely to close the month again in perte.
An oversaturated memes market
The once white-hot crypto industry has faced selling pressure not seen since last year. 'widening of the liquidation market in May , in part due to "a reduced presence of new retail investors ", according to Lunde.
In Asia, where the crypto market is dominant d by retail investors, China's recent crackdown on crypto trading and bitcoin has also hurt the tokens even.
The crackdown in China " makes it harder for people to invest money in the market, and rumors of new regulations on centralized exchanges have raised concerns about further investment "said Rachel Lin, CEO of theSynFutures decentralized derivatives exchange. "Many coin traders in Asia are also miners, so they are preoccupied with dealing with the crackdown and recouping their losses.
the tokens "was over some time ago," Annabelle Huang, a Hong Kong-based Amber Group partner, said. "So it's all about the the mining ban and the 'great migration ' [in China] as I call it. "
Eye of speculative traders next big thing
For some analysts, it is clear that these speculative traders, who liked once the high returns of the tokens even, have moved on to the next hot project, as evidenced by the rise in powerof Axie Infinity in recent weeks.
"This summer so far turns out to be the summer of crypto game projects" Arcane's Lunde said, warning that the gaming industry, potentially, is also facing an overly exuberant market, similar to what happened with the tokens meme.
At their peak reached last week, AXS tokens had a total market cap of over one billion of dollars, compared to the French video game company Ubisoft 's market value at around $ 7 billion .
"I think it is safe to say that the bulls may be a little too bullish at the moment "said Lunde.
At time of publication, AXS was trading at around 1$ 5.4, according to data from Messari , down 46.3% from its all-time high of $ 28.66 on July 15.
Vinokourov of Synergia Capital, citing the outcome of the bitcoin carry trades with the one-month bitcoin futures contract moving to backwardation , said more money is currently being put aside rather than being put into crypto.
Cash-and-carry trading - that is, shorting futures contracts and going long in an asset to profit from a narrowing of the gap between the futures price and the spot price - a become mens attractive to traders, as the difference between the futures contract price and the spot price over an annualized period has decreased significantly recently. Source: Skeew
The crypto market has need a much stronger "risk-on" mood before even tokens can, if at all, make another comeback, he said.
Legacy (and some hopes) remain
But not all are pessimistic about the destination of the tokens themselves.
"Beyond speculation, these very coins have in fact experienced great traction in the larger crypt o ecosystem, especially when used as a trick for content.on social media, ”said spokesperson Jay Hao, CEO of crypto exchange OKEx. "It is especially interesting to see millennials getting involved in these coins.
Hao said that if the creators and communities of the memes tokens can helping build a better infrastructure, tokens have the potential to grow into "robust utility tokens " that go beyond the jokes or culture they represent.
Despite the disappointing prices, the dogecoin community, for example, remains active: A new price structure for dogecoin was proposed at the end of May by its main developers to reduce overall transaction costs . Last week, eToro, a stock exchange primarily aimed at "social" or beginner traders, reported that dogecoin became the fifth most held crypto on the exchange after being listed for less than two months.
And chief dogecoin booster Musk has posted several tweets regarding the token meme this month, although his ability to blow up the token represented by Shiba Inu is no longer what it is. it once was.
OKEx 's Hao said that limited access to crypto investments poses a major challenge for crypto newbies to keep investing in the market after being attracted to tokens meme.
"It would be an easier first step for them to use traditional channels such as [exchange-traded funds], or if the banks operated as a guardiens, ”he said. “Then we would have retail investors… continue to invest in promising [alternative tokens] and [decentralized finance] - understanding that the gains may not happen overnight and the benefits will come. playing the long game. ”