These three meme tokens continue to see strong fundamentals-driven selling pressure today.
Crypto markets are seeing intense volatility build today, as investors appear to be concentrating their efforts on some of the larger-cap crytpocurrencies, which are relatively flat on the day. Unfortunately for speculators in a number of meme tokens such as Shiba Inu (SHIB -14.17%), Pepe (PEPE -13.38%), and Dogwifhat (WIF -17.67%), today’s price action hasn’t been so friendly. These three tokens are down 6.6%, 5.4%, and 7.1%, respectively, over the past 24 hours. Notably, these downside moves were more elevated during this morning’s trade, as these meme coins did move higher through the end of the weekend.
Some of this move can be attributed to heightened concerns around higher-for-longer interest rates, due to commentary from the Federal Reserve last week. However, other fundamental factors appear to be at play driving these meme tokens lower today.
Let’s dive into what’s moving the needle for these three popular projects today.
Fundamentals pointing in the wrong direction
In the absence of many of the fundamental metrics investors use to analyze stocks (price-to-earnings ratios, leverage ratios, return on equity or invested capital, etc.) investors in crypto are forced to rely primarily on data around capital flows, liquidations (which derivatives contracts are unwound), and other factors such as total value locked (TVL), representing how much capital exists within a blockchain ecosystem at a given time.
Using data from Coinglass, it appears each of these three meme tokens are seeing very high levels of long liquidations (the highest since early March). For Shiba Inu, nearly $15 million of long positions were wiped out over the past 24 hours, a massive spike and one of the highest this year. Pepe saw a similar spike, with $2.9 million in liquidation over the past day, and Dogwifhat’s 24-hour liquidation numbers come in at $1.2 million. Given the relative size of these projects, these numbers are considerable, and suggest that many speculators are unwinding their leveraged positions, driving further downside volatility in these tokens’ intraday prices.
Moving over to total value locked data courtesy of DefiLlama, some similar trends are taking hold. From early March, Shiba Inu’s Shibarium has seen its TVL shrink from around $3.9 million to $1.9 million today, with the downtrend continuing over the past day. Pepe’s TVL decline over the same period has been more pronounced, diving from $15.1 million to just $4.2 million, and while data is harder to find on Dogwifhat, it does appear less activity within the more speculative areas of the crypto market doesn’t bode well for this token.
What does this all mean moving forward?
In order for any cryptocurrency to have value, investors need to believe that others will continue to perceive it as an asset worth more in the future, and some fundamental case around utility or usage should be present. Whether that’s a growing community, more users on a platform, more applications in an ecosystem, or dollars floating around trading a given token, there needs to be something there.
Since March, it appears these three meme tokens have seen continued downside on the fundamental metrics that matter. So, until there’s some sort of price action that signals a recovery is ahead, or users flock to these ecosystems en masse, it’s possible this downtrend could continue from here.
Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
