Why Are Meme Coins Falling?

Why Are Meme Coins Falling?

The cryptocurrency market is experiencing a downturn, with meme coins like Dogecoin, Shiba Inu, and Pepe leading the decline. As of June 18th, meme coin volumes have fallen by 11% in the past 24 hours, reaching $45.31 billion. Daily trading volumes, however, have surged by 79% to $6.25 billion, indicating a mass liquidation effort.

Historical Market Trends

Traditionally, bull markets in cryptocurrency start with Bitcoin (BTC) and Ethereum (ETH), which then impact altcoins. During the recent market correction, the Total3 index, excluding BTC and ETH, rose to $720 billion on June 5th before retreating. It has since fallen by 19% to $582.88 billion at the time of writing. This has resulted in the formation of a descending parallel channel on the daily chart.

During this time, the daily Relative Strength Index (RSI) dropped below the overbought zone, indicating that investors were taking profits. Ethereum-based meme coins, especially PEPE, had been increasing in value. A high RSI near 70 typically signals overvaluation of altcoins, leading to market correction or trend reversal.

Meme Coin Trading Volume Declines

In March, meme coins dominated the market, but there has been a sharp decline since then. Data from Dune Analytics shows that meme coin transactions across networks like Ethereum and Solana have plummeted from $996.7 million in March to $30.35 million in the week ending June 14th.

Dogecoin (DOGE) experienced a 41% drop in trading volume between April 17th and June 17th. Shiba Inu (SHIB) and Pepe (PEPE) saw declines of 68% and 34%, respectively.

Key Takeaways

• Investors are liquidating meme coins, contributing to increased daily trading volumes despite falling market values.
• High RSI values near 70 suggest overvaluation, prompting profit-taking.
• Meme coin trading volumes have declined significantly, especially for DOGE, SHIB, and PEPE.
• The Total3 index, excluding BTC and ETH, has fallen by 19% since early June, reflecting broader market correction.

Technical analysis indicates that the altcoin downtrend continues, with the Total3 indicator moving downward within a descending parallel channel. The RSI also recorded a steep decline, signaling strong bearish momentum in the market.