Memecoins like Dogecoin, POPCAT outpace AI tokens – Why and how?

Dogecoin and other memecoin projects still appeal to retail investors, despite their limited utility.
Adoption of memecoins has been aided by deployment platforms like Pump.fun, which have simplified the process of launching tokens

As a seasoned analyst with over two decades of experience in the financial markets, I’ve seen my fair share of market trends and fads. The current focus on memecoins, like Dogecoin and its peers, is an interesting phenomenon that I find myself both amused and intrigued by.

To start off the week, the cryptocurrency market showed signs of recovery following a drop towards the end of last Friday. By Monday morning, Bitcoin regained the $68,500 mark and went on to reach a daily peak of $69,225 in the charts. This renewed momentum helped Bitcoin erase its weekend losses, although it led to a somewhat underwhelming weekly finish for optimistic Bitcoin investors on Sunday.

At the end of last week, a downturn in the market was sparked by reports that the U.S Department of Justice is investigating Tether. This news negatively impacted the optimistic feelings in the second half of October. However, Tether’s CEO, Paolo Ardoino, later clarified that these reports were false, which helped to steady crypto prices overall.

In just three days before the end of the month, experts predict increased turbulence in the cryptocurrency market. This instability may be driven by the upcoming U.S. election and anticipation of additional Federal Reserve interest rate reductions.

Memecoins are dominating the conversation, AI tokens not so much

Rather than being fueled by practical value, memecoins have maintained a strong appeal for numerous investors who are more motivated by sentiment. These crypto ventures, particularly noteworthy in the memecoin sector, have emerged as leading performers since the beginning of October.

It’s worth noting that the data from TradingView shows some impressive gains for DOGE, POPCAT, and NEIRO this October, with increases of 40%, 49%, and 57% respectively. These digital currencies have outperformed other significant alternatives in the market. However, it’s important to mention that among the top 100 cryptocurrencies by market capitalization, only Raydium (RAY), a part of Solana’s ecosystem, has recorded higher returns.

Contrarily, during the same period, tokens centered around AI experienced losses. For instance, TAO, NEAR, and RENDER dropped by approximately 6.5%, 14%, and 19% respectively.

The different successes of meme coins versus AI tokens highlight the repeating patterns in market trends, especially considering that AI tokens were more popular in recent quarters due to advancements related to Nvidia. Furthermore, the quick acceptance of new meme coin options like NEIRO and GOAT demonstrates the strength of retail-influenced opinion, where hype-based stories often overshadow the importance of fundamentals.

Narratives to play a role in defining Q4 crypto landscape

October has already seen multiple crypto fads, including the convergence of AI and crypto in play. Still, memecoins remain in favor, given many investors are more focused on speculative opportunities at the expense of long-term fundamentals.

Recently, Ki Young Ju, founder of CryptoQuant, noted that there’s been an increase in people searching for information about memecoins, which could potentially hit a fresh peak. In contrast, during the same period, Bitcoin search activity dropped and remained close to its lowest point of the year.

The popularity of memecoins has been primarily driven by the potential for massive returns for early adopters based on past cycles. Mental exhaustion among traders who have been eagerly waiting to book profits has also contributed to the greater appetite for these highly speculative assets.

2024-10-29 11:03

Memecoins are dominating the conversation, AI tokens not so much

Narratives to play a role in defining Q4 crypto landscape

Read More