The meme era is not over, but please maintain profits and do not play with fire

Author: Lavina

Compiled by: Shenchao TechFlow

Memes are the main theme of this cycle. WIF and PEPE have had a glorious time together, constantly breaking records and creating peaks. However, with DeFi and other fundamental narratives regaining dominance, is the game of Memes over? Let's explore this through several indicators.

Meme Dominance

In the current cryptocurrency cycle, Memes are undoubtedly one of the focal points. Although the recent dominance of Memes in the major altcoin market has declined, this does not mean that the game of Memes is over. From multiple perspectives, the Memes market still possesses its unique vitality and potential.

CryptoQuant's Ki Young Ju said: "Get ready, guys, it's over."

(Source: Twitter)

What Does Duck Think?

The analyst known as DonAlt, who has accurately predicted market bottoms and tops in the past, does not really like Memes through reverse operations. Despite holding an extreme opposing view, he maintains the same perspective. Regarding WIF, he recently said: "It looks terrible. No matter how biased you say I am, a drop is a drop."

(Source: X)

He indeed enjoyed profits from shorting when the coin started to plummet. However, he has exited the market, claiming he doesn't want to "kill" the coin. It's better to be safe than sorry, and being warned not to become a "moon boy" isn't a bad thing, right?

Although DonAlt holds an extremely bearish stance, he does not rule out the possibility of Memes rising again. If Bitcoin ultimately reverses its trend, Memes will follow.

However, if a bear market comes again, then Memes holders will have to buckle up. In DonAlt's words: "I don't oppose this; if Bitcoin breaks out upwards, your Meme will perform well, but it will be very brutal in a tail-end market."

Entering Solana

Most of the Memes pushed to the forefront in this cycle are based on Solana. In fact, the number of coins minted on this chain has surpassed that of other chains like BNB, Ethereum, and Polygon.

To compare, it is not an exaggeration to say that the dominance of Ethereum NFTs in the last cycle has been replaced by the dominance of Solana Memes in this cycle. In fact, it has become the preferred chain for retail and Memes traders.

A recent report from Pantera Capital states: "By May 2024, Solana will account for 85% of all new tokens appearing on DEXs, up from 50% a year ago. The growth of Solana-based tokens reflects its advantage in retail usage driven by memecoin activity."

(Source: Pantera Capital)

As the Memes craze gradually dissipates, will Solana be affected? To some extent, yes. However, Solana does have fundamentals to rely on.

Several consumer-facing applications, DePin projects, content distribution applications, CLOB-based DEXs, and gaming applications are being built on this blockchain. So, even if Memes take a temporary break, Solana will not be sidelined.

According to Pantera Capital, Solana's future is undoubtedly secure. Solana's monolithic architecture has a product roadmap focused on optimizing each component of its own blockchain, similar to Apple's approach to its vertically integrated hardware and software stack in macOS.

It's "Debate" Season Now

Political financial Memes are expected to make a comeback at the end of this month. The debate between U.S. President Joe Biden and presidential candidate Donald Trump will air on June 27.

The podium positions and order of closing statements have already been decided by coin toss. As debate day approaches, volatility in the basket of political financial Memes is expected to increase, including Jeo Boden [BODEN], Doland Tremp [TREMP], Super Trump [STRUMP], MAGA [TRUMP], and others.

Analysts at Bitfinex state that general discussions about capital gains taxes, particularly regarding cryptocurrency tax policies, could have a significant impact on the market. They said: "During and after the debate, based on the performance of these tokens, 'political financial' tokens may experience significant market volatility, as these tokens themselves have become speculative assets regarding election outcomes."

Therefore, the Memes season is not over yet, and it can be expected that the market will experience an influx of volatility before November.

Memes Liquidity

Despite the decline in dominance, it is worth noting that the liquidity of Memes is currently at its peak. According to data from Kaiko, the 1% market depth of DOGE, SHIB, PEPE, WIF, BONK, GROK, BABYDOGE, FLOKI, MEME, HarryPotterObamaSonic10Inu, and HarryPotterObamaSonic recently reached a historic high of $128 million.

(Source: Kaiko)

Generally, the higher the liquidity, the healthier the market, as large trades can be executed without worrying about price impact. Looking back, this has tightened the bid-ask spread. However, the trading costs of Memes remain high. On most exchanges, the bid-ask spread exceeds 2 basis points, supporting the above narrative. Kaiko's report states: "While more and more market makers are trying to provide liquidity for these tokens, they are still considered high-risk due to their high volatility."

This is not a case of "pulling a rabbit out of a hat." Market participants have not completely stopped trading Memes. They are just trading cautiously. Despite the decline in dominance, liquidity continues to flow in, indicating that this group of tokens has not been abandoned.

The rule is to never "marry" your Memes; always remember that they can plummet. Play with fire like a trader, but make sure to hold onto profits instead of burning your fingers.