The memecoin phenomenon was not as effective in the crypto market at the beginning of last month, as the top cryptocurrencies in this category barely outperformed bitcoin. BTC’s monthly gain was 44.5%, while the top two meme-based coins, DOGE and SHIB, gained 27% and 40.7%, respectively.
Doge needs a market-moving catalyst
Dogecoin is losing popularity as its most prominent backer, Elon Musk, is reportedly developing an independent Twitter coin instead of integrating his beloved cryptocurrency into the social media platform owned by the entrepreneur.
For most of 2022, DOGE/USD has underperformed, except when Elon Musk acquired Twitter. The acquisition has raised hopes for increased use of the cryptocurrency in the Dogecoin community.
However, without any tangible announcements or reports from Twitter hinting at the use of Dogecoin, the 100% price increase since October 2022 has been reversed in the following two months. Google search volume for the token has also decreased since Q1 2022.
Dogecoin is losing popularity as its most prominent backer, Elon Musk, is reportedly developing an independent Twitter coin instead of integrating his beloved cryptocurrency into the social media platform owned by the entrepreneur.
For most of 2022, DOGE/USD has underperformed, except when Elon Musk acquired Twitter. The acquisition has raised hopes for increased use of the cryptocurrency in the Dogecoin community.
However, without any tangible announcements or reports from Twitter hinting at the use of Dogecoin, the 100% price increase since October 2022 has been reversed in the following two months. Google search volume for the token has also decreased since Q1 2022.
Another factor affecting the price of DOGE last year was the launch of Dogechain. An EVM-compatible blockchain that uses DOGE as a gas payment token. However, Dogechain failed to capture the attention of users, becoming mostly a place to trade “shitcoin”. Currently, less than 1% of DOGE is bridged to Dogechain.
Finally, Dogecoin’s on-chain data suggests that the price may be overpriced. The Net Value to Transaction (NVT) ratio is the ratio of price to profit for cryptocurrency markets. The metric measures the ratio of a token’s market capitalization to transaction volume. Higher transaction volume relative to market value corresponds to lower NVT figures.
Coinmetrics’ historical NVT Dogecoin chart suggests that the token may be overpriced. Over the past eight years, the NFT ratio has fluctuated between 10 and 100 with a few breakouts in bull markets. Dogecoin’s NVT benchmark hasn’t crossed the bottom of its long-term range since mid-2021, putting it at even worse risk.
The internet’s first and most beloved meme coin will need a catalyst like an Elon Musk tweet, or a drastic change in the token’s tokens or fundamentals, to regain momentum in the short term.
Dogecoin has been trading between $0.07 and $0.19 since June 2019. A break out of the range could see continued momentum towards the breakout.
Related to: Rumor has it that Dogecoin may move to Proof of Stake
A brand building strategy for Shiba Inu may not be enough
Like Dogecoin, the faltering meme coin story affected Shiba Inu’s buying power. The second largest meme coin is working on increasing the Shiba Inu’s brand value by partnering with clothing brands such as the Bugatti Group and English designer John Richmond.
Shiba Inu’s Google Trend score shows a similar depressed pattern since the start of 2022 as Dogecoin, with no increase in search volume after the crypto bullishness of 2021 faded in Q1 2022.
Like Dogecoin, the Shiba community also has an independent blockchain, Shibarium, owned by the Shiba community. However, the blockchain gas payment token is BONE instead of SHIB, which brings no real value to SHIB token holders.
The total SHIB balance on crypto exchanges jumped earlier in January, a negative sign, indicating a sign of more selling. Conversely, Nansen-discovered smart money wallets slightly increased their holdings on January 25, which may add some strength to the recent rally.
The token traded between $0.00000825 and $0.00001794 during the weekly period. A break out of this range is likely to see a big move in the breakout direction. The midpoint of the range at $0.00001200 also acts as a resistance level for buyers.
While the most popular meme tokens are on the wane, Floki Inu and Solana’s BONK token had impressive launches in January thanks to SOL’s price increase and improved tokennomics with Floki Inu. Floki community voted burn $100 million worth of FLOKI tokens, nearly doubling its price on January 29th.
Overall, it seems that the meme coin phenomenon of 2021 has lost a lot of steam. While meme coins are moving with the rest of the market, their performance has been average. Improvements to projects by the team or community have become essential to push back these marks.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should do their own research when making a decision.
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