The meme coin sector, valued at $53 billion, experienced significant growth on Tuesday, with notable coins like pepe (PEPE) and dogwifhat (WIF) registering increases of 22% and 25% respectively, according to CoinGecko data. This surge followed Bitcoin’s climb to a one-month high of $65,000 before retracting to $63,000. The strong performance of meme coins amidst Bitcoin and Ethereum profit-taking indicates a trend of diversification into more speculative assets.
The CoinDesk 20 Index (CD20), which tracks large-cap tokens, saw a 2.3% increase over the past 24 hours. Meme coins inspired by American politics saw a rise in issuance following an incident involving Donald Trump at a rally in Pennsylvania. Coins like America Coin (USA) and Super Trump (STRUMP) surged by 204% and 43% respectively post-incident.
Meme coins tend to excel when Bitcoin and Ethereum stabilize near peak levels but struggle during market downturns. For instance, Dogwifhat spiked by over 60% in May when Bitcoin ranged between $66,000 and $69,000. Subsequently, WIF experienced a 60% decline over the next month as Bitcoin dropped by 21%.
Bitcoin’s current market depth on Binance hovers around $14.8 million to $11.2 million, a minor 2% difference from the current level. In contrast, WIF’s market depth is significantly lower at $1.4 million to $1 million, making it more susceptible to rapid price fluctuations due to liquidations and market orders compared to larger tokens like Bitcoin and Ethereum.