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Why Meme Coins Could Rebound Stronger
Meme coins have tumbled with broader cryptocurrencies over the past 30 days, triggering outflows in the market. Meme coins, known for their over-the-market price rallies, are trading shadows as the correction bites harder. However, bulls are calling for a reversal, citing macro conditions and recapitalization of crypto holdings by users.
At press time, the total meme coin market cap is $44.4 billion, down 5.8% over the past 24 hours and paralleled by a decline in volume. To put that into perspective, the market cap was above $70 billion this year, showing a significant chunk wiped out in the latest meme coin frenzy. Market analysts explain why a rally could breathe new life into the asset class.
Meme Coins Will Bounce With Cryptocurrencies
Most market commentators believe that there is bullish momentum in meme tokens in line with a similar pattern in Bitcoin. This has been the status quo as positive sentiment in the market leader can spur growth in other areas. A case in point are the inflows into spot Bitcoin ETFs that have led to the growth of decentralized finance (
DeFi) numbers and a frenzy for meme coins.
July was tipped to be a bullish month for the market, but factors like the asset sell-off in Germany and the Mt Gox redemption sent sentiments tumbling. This also affected the numbers of meme coins. However, while bulls are eyeing a price increase in
Bitcoin and Ethereum, meme token holders remain optimistic about a price recovery.
Potential interest rate cuts
The Federal Reserve cutting interest rates this year will boost investment in risky assets with meme coin holders expecting price growth. Rate hikes on the other hand have triggered outflows due to volatility in these assets. The latest US employment data has increased optimism for September rate cuts, leading to positive macro sentiment. Furthermore, these coins could light up with users switching holdings to get quick rewards from certain assets.
Read also: Can Bitcoin Withstand German Selloff?
David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.