Journalist
Posted:
The memecoin sector has taken a severe hit over the past year, with its market cap falling to $42 billion at press time. It had surged to a high of $127.26 billion in November 2024, but it has since retraced all those gains.
This prolonged sell-off is a sign of how difficult it is for memecoins to maintain their gains and how prone they tend to be to corrections.
Source: CoinMarketCap
The top three memecoins by market cap now are Dogecoin [DOGE] at $22.35 billion, Shiba Inu [SHIB] with $5.07 billion, and Pepe [PEPE] at $2.05 billion. This pecking order highlighted the dominance of Dogecoin in terms of size.
Another factor is how the sector tends to move together. Usually, a Dogecoin rally inspires confidence and FOMO in the market, and smaller-cap memes tend to surge higher. Social media hype and a risk-on market attitude are necessary to propel memes higher. Especially since they only boast of forging a community as a use case.
Dogecoin to $1 or Shiba Inu to $0.01?
Shiba Inu’s size, by market cap, is 4.5 times smaller than Dogecoin. That meant its price, which was $0.0000086 at the time of writing, should be easier to push higher. To reach $0.01, SHIB needs to rally by roughly 1,200x. By comparison, to hit $1, Dogecoin only needs to rally by roughly 6x.
This means that it is much easier for Dogecoin to reach $1 than it is for Shiba Inu to trade at $0.01.
Another problem is that a 1,200x rally for Shiba Inu would mean its total market cap would be larger than the current crypto market capitalization of $3.15 trillion. This would be an absurd reality if it came to pass even five years later.
In conclusion, memecoin traders and investors should seek to capitalize on social media hype and favorable market conditions after a strong Bitcoin [BTC] run. A multi-year HODL approach might be viable, but it has higher drawdown risks, and the memecoin sector’s performance likely won’t match the previous cycles.
Final Thoughts
- It is risky to hold memecoins long-term, as their only utility is to build a community or capitalize on a cultural relevance for speculative trading.
- That does not mean they aren’t profitable, only that holders must have more realistic price targets.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion