The memecoin phenomenon did not prove as effective in last month’s early-year cryptocurrency market rally, as gains for the top cryptocurrencies in this category barely outpaced Bitcoin. BTC’s monthly gain was 44.5%, while the top two meme-based coins DOGE and SHIB gained 27% and 40.7%, respectively.
Doge needs a catalyst to move the market
Dogecoin is losing its popularity as its most prominent supporter, Elon Musk, is reportedly developing a standalone Twitter coin instead of integrating his favored cryptocurrency with the entrepreneur-owned social media platform.
For most of 2022, DOGE/USD underperformed, except when Elon Musk acquired Twitter. The acquisition raised hopes in the Dogecoin community about further use of cryptocurrencies.
However, without any tangible announcement or report from Twitter hinting at the use of Dogecoin, the 100% price increase from October 2022 reversed in the following two months. Google search volume for the token has also decreased since the first quarter of 2022.
Dogecoin is losing its popularity as its most prominent supporter, Elon Musk, is reportedly developing a standalone Twitter coin instead of integrating his favored cryptocurrency with the entrepreneur-owned social media platform.
For most of 2022, DOGE/USD underperformed, except when Elon Musk acquired Twitter. The acquisition raised hopes in the Dogecoin community about further use of cryptocurrencies.
However, without any tangible announcement or report from Twitter hinting at the use of Dogecoin, the 100% price increase from October 2022 reversed in the following two months. Google search volume for the token has also decreased since the first quarter of 2022.
Another factor that influenced DOGE’s price last year was the launch of Dogechain. An EVM compliant blockchain using DOGE as a gas payment token. However, Dogechain failed to gain user traction, becoming a place primarily for “shitcoin” trading. Currently, less than 1% of DOGE is connected to Dogechain.
Lastly, Dogecoin’s on-chain data suggests that the price may be too expensive. The network value to transaction value (NVT) ratio metric is an equivalent price-earnings ratio for cryptocurrency markets. The metric measures the relationship between the token’s market capitalization and its trading volume. Higher transaction volume compared to market value corresponds to low NVT readings.
Coinmetrics’ historical NVT chart of Dogecoin suggests that the token could be overpriced. For the past eight years, the NFT ratio has ranged from 10 to 100, with a few outliers during bull markets. Dogecoin’s NVT metric has not bottomed out in its long-term range since mid-2021, exposing it to further downside risk.
The internet’s first and most favorite meme coin would require a catalyst like a tweet from Elon Musk, or a drastic change in tokenomics or token fundamentals to revive a short-term positive streak.
Dogecoin has been trading in a range between $0.07 and $0.19 since June 2019. A breakout of the range could see continued momentum in the direction of the breakout.
Shiba Inu’s Branding Strategy May Not Be Enough
Like Dogecoin, the weakening of the meme coin narrative affected the buying strength of Shiba Inu. The second largest meme coin has been working to enhance the brand value of the Shiba Inu by forming partnerships with clothing brands such as the Bugatti Group and English designer John Richmond.
Shiba Inu’s Google Trend score shows a similar depressing pattern since early 2022 as Dogecoin, with no spike in search volume since the 2021 crypto mania subsided in Q1 2022.
Like Dogecoin, the Shiba community also has an independent blockchain, Shibarium, which is owned by the Shiba community. However, the blockchain gas payment token is BONE instead of SHIB, which does not bring any real value to SHIB token holders.
SHIB’s total balance on cryptocurrency exchanges increased in early January, which is a negative sign that exposes the token to more sell-offs. By contrast, the smart money wallets identified by Nansen increased their holdings slightly on Jan. 25, which may add some strength to the recent rally.
On a weekly time frame, the token trades between $0.00000825 and $0.00001794. A break out of this range will likely see a strong move in the direction of the breakout. The midpoint of the range at $0.00001200 also acts as a resistance level for buyers.
While the major meme tokens have seen diminishing momentum, Floki Inu and Solana’s BONK token saw impressive results in January thanks to an increase in the price of SOL and improved tokenomics with Floki Inu. Floki’s community vote to burn $100 million worth of FLOKI tokens, which nearly doubled in price on January 29.
In general, it seems that the phenomenon of meme coins as of 2021 has lost steam considerably. While meme coins move with the rest of the market, their performance has been average. Project improvements by the team or the community have become essential to boost these tokens.
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