Memecoins have been dominating recent crypto market gains, with six of the top ten performers in the last 24 hours being cryptocurrencies based on internet jokes and memes. Recent interest rate cuts by the Central Bank of China and the U.S. Federal Reserve have likely been helping fuel the surge, and some analysts feel memecoins could in turn lead the charge for the cryptocurrency market in general.
Bonk (BONK), Shiba Inu (SHIB), Floki (FLOKI), Pepe (PEPE), Dogecoin (DOGE), and Brett (BRETT) have outpaced the vast majority of top 100 cryptocurrencies by market cap, data from CoinGecko shows, led by Solana-based BONK’s 18% gain.
Ethereum-native SHIB, viking-themed dog token FLOCKI, and 4chan-originated frog coin PEPE have each increased more than 12.5% in the same time period. Original memecoin DOGE and BRETT, the largest memecoin on Coinbase’s BASE, took the 9th and 10th spots, with each jumping roughly 7%.
Experts said that memecoins, which tend to be riskier than other cryptos, have often presaged wider market gains in the past.
“Memecoins turned to be leading indicators of a broader market rally given their speculative nature. In the last cycle in 2021, DOGE went up 5X in a week in mid-April, leading the ETH rally by ~1 month; [DOGE then] rallied another 2X [during] the ETH rally,” wrote Kelly Ye, a portfolio manager for liquid venture firm Decentral Park Capital, to Unchained via Telegram.
Read more: Is an ‘Uptober’ Bitcoin Price Rally Imminent?
“It’s time for a memecoin breakout,” BitMEX co-founder Arthur Hayes wrote on X on Friday. , I respect my $MOTHER, I $MOG like no one else, but I can’t neglect $PEPE.”
MOTHER is a memecoin started by Australian music artist Iggy Azalea via Solana’s memecoin factory Pump.Fun, while MOG is a cat-themed token with a cult-like following on X. Neither MOTHER and MOG are in the top 100 cryptocurrencies by market cap.
“The memes that have a strong [cultural] background and community support could still be the ones that lead this cycle, with speculative capital seeking high-return alternatives,” Ye noted.
Often considered as lacking intrinsic value, successful memecoins are marked by massive communities and viewed among traders as beta bets, which are leveraged plays on the native tokens for their corresponding blockchain network. For example, a memecoin beta for Solana’s SOL token is not only correlated with the price of SOL, but also can yield a return multiples higher than SOL itself.
Courting Chinese Traders
One of the potential reasons behind the recent surge in memecoins has been that on Tuesday, the Central Bank of China (CBC), cut interest rates on its one-year policy loans by the largest amount in its history in a bid to stimulate the Chinese economy, the world’s second largest. The CBC’s 30-basis-point cut came a week after the U.S. Federal Reserve also slashed interest rates for the first time in several years, a move that typically makes riskier assets like cryptocurrencies more attractive.
Coinciding with China’s move, memecoin enthusiasts, who usually write and speak in English online, have posted tweets about their favored tokens in Chinese.
For example, one user who goes by @kmoney_69 wrote on Tuesday, “中国降息对市场来说是个好消息。这将为亚洲投资者参与加密货币开放大量流动性。如果他们看好 $ETH，我相信 $MOG 和 $PEPE 是很好的杠杆赌注。与上一个周期的 $DOGE 和 $SHIB 类似。 我爱中国.”
Translated by X to English, it reads, “China’s rate cut is good news for the market. This will open up a lot of liquidity for Asian investors to participate in crypto. If they are bullish on $ETH, I believe $MOG and $PEPE are good leveraged bets. Similar to $DOGE and $SHIB in the previous cycle. I love China.”
Young owns more than $1,000 worth of MOG, as well as a few NFTs, gold, silver, and more than $1,000 each worth of BTC, ETH, LINK, AAVE, stETH, PEOPLE, and DOGE.
