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Memecoins took a beating on Sunday amid a wider market slump that saw Bitcoin fail to regain the $28,000 level, fueling bearish sentiments in the market.
The frog-themed PEPE token, which saw one lucky buyer turn a $250 investment into an on-paper profit of over $1 million, has shed 30% of its value from its peak on April 20 and is down 13% on the day, per CoinGecko.
Dogecoin, the largest memecoin by market cap, has tumbled over 12% in the past week, according to CoinGecko—with most of the top-ranked memecoins also slipping by double digits over the same time period.
The week starting April 17 saw a massive memecoin surge led by the newly-launched PEPE. The resulting “meme coin frenzy” saw high trading volumes snarling up the Ethereum network.
Who trades memecoins?
Memecoins are, as the name suggests, typically linked to internet memes such as Pepe the Frog or Doge. The central motivation behind high trading volumes for memecoins is typically short-term gains, as traders hope to capitalize on news linked to the memecoin and its underlying meme.
The majority of memecoins have little to no fundamental value and trade entirely on popularity; they are usually issued in large quantities, with market prices of less than a cent to make them look cheaper and attract potential buyers.
Memecoins are constantly issued and traded in the market, however, there are occasions when a few memecoins bring massive gains for certain traders—leading to a short-term phenomenon as traders hunt for the next "moonshot."
A similar trend occurred at the start of 2023, when the BONK memecoin on Solana surged, turning a $1,000 airdrop into $122,000 in the space of a week.
Last week, a number of factors propped up the memecoin market, including reports of PEPE holders making huge on-paper gains, coupled with excitement around "Dogeday" on the meme-friendly date of 4/20, and bullish sentiment across the wider crypto market as Bitcoin traded around $30,000.
However, Bitcoin's downturn during the week and “sell the news” price action on Dogecoin following Dogeday saw the memecoin phenomenon fizzle out by the weekend.
Bitcoin is currently down over 9% on the week, trading at around $27,500.