Cointelegraph analysts allowed the possibility of meme tokens’ further correction

What’s new? Meme tokens have begun to yield less to bitcoin, which may indicate that traders will pay more attention to the recovery of the first cryptocurrency after halving, Cointelegraph analysts note. Thus, in the last 24 hours, the capitalization of meme tokens fell by 1,9%, below $55 billion. Of the top 10 most severely affected POPCAT, Book of Meme (BOME), BONK, and dogwifhat (WIF), which lost from 9,9% to 5,7% of the value.

Material by Cointelegraph

What else is known? According to historical data, a bull market is usually driven by the rise of altcoins. However, the TOTAL3 indicator, the total market capitalization of all cryptocurrencies except BTC and ETH, is currently declining after rallying in October 2023. Since the first week of April, the figure has fallen 9% to $662,9 billion, according to TradingView.

Traders booked profits and the weekly Relative Strength Index (RSI) moved into an overbought zone after crossing the 70 mark, which occurred at the peak of the excitement surrounding the new Solana (SOL) blockchain-based meme tokens.

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The RSI indicator is based on the concept of relative price strength. It fluctuates between 0 and 100 and allows you to assess the strength and intensity of the current trend. An RSI value above 70 usually indicates that the asset is overbought, which can be a signal of a possible downward price reversal. An RSI value below 30, on the other hand, indicates that the asset is oversold and may be a signal of a possible upward reversal.

An RSI value above 70 means that altcoin prices are overvalued, so they have begun a trend reversal or corrective pullback. Over the past seven weeks, the RSI has dropped from 89 to 62, indicating that market conditions still favor a correction over the next few weeks.

According to data from analytics platform Dune, meme token transaction flows across all blockchains fell a cumulative 81% from a March high of $998,55 million to $191,88 million by May 3. This situation may indicate that trader interest or confidence in the sector has waned recently, Cointelegraph writes.

According to data from the CoinMarketCap aggregator, the trading volume of the largest meme token, DOGE, fell by about 50% between March 7 and May 6. The trading volumes of SHIB and PEPE fell by 88% and 51% respectively over the same period.

According to Cointelegraph analysts, due to the likely strengthening of the US economy, traders may favor safe-yielding assets such as Treasuries over riskier meme tokens. Analysts allowed the possibility that investors could use the profits generated from meme coins in Q1 2024 to invest in other sectors of the crypto ecosystem.

Earlier, Crypto Koryo reported that crypto market data aggregator CoinMarketCap registered 138 new meme tokens in April, which was a record. Last April, only 18 such coins were added to the platform. The new projects favor the Solana blockchain and the Ethereum-based Layer 2 (L2) Base network.

As for bitcoin, on April 20, the fourth halving took place in the blockchain of the first cryptocurrency, following which the reward for mining a block was halved, from 6,25 to 3,125 coins. The event occurs once every four years. From April 20 to May 2, the asset’s exchange rate fell 11% to $57 000 but has now recovered to $64 102, which is 0,2% higher than the price at the time of the halving.