Key Points
- Bitcoin’s flash crash led to a significant decline in meme coins and altcoins.
- The future of meme coins is uncertain as the altcoin season ends.
Bitcoin experienced a flash crash on Monday, with its price dipping almost 10% from its all-time high of $104,088 to $94,150. This sudden drop also affected altcoins and meme coins, including Dogecoin, Shiba Inu, Pepe, Dogwifhat and Bonk.
Meme Coins and Market Trends
The top 10 meme coins, as ranked by market capitalization, saw nearly double-digit losses within 24 hours. With the abrupt end of the altcoin season, it’s unclear whether these meme coins will recover from their recent losses and reach their cycle bottom.
On Tuesday, Bitcoin traded almost 6% below its all-time high. The flash crash of the largest cryptocurrency marked the end of the altcoin season. The blockchain centre altcoin season index currently reads 65 on a scale from 0 to 100, indicating the end of the altcoin season.
Technical indicators are giving mixed signals about where the Bitcoin price may be headed. While the relative strength index reads 59 and is sloping upwards, the moving average convergence divergence shows underlying negative momentum in the Bitcoin price trend.
A further correction in Bitcoin could spell trouble for meme coins. A decline in the largest cryptocurrency typically leads to mass liquidation in meme coins and altcoins across derivatives exchanges.
Christmas Rally and Meme Coins
Meme coins have seen a steep decline in the past 24 hours. Despite some recovery in the past hour, there have been double-digit corrections across the top 10 tokens. The meme category’s market capitalization has dropped nearly 15% in the past 24 hours, down to $128.26 billion.
During the Christmas holidays, altcoins usually rally due to less activity across crypto exchanges and a relatively lower volume of trades. Both factors make it easier for the market to move and prices to fluctuate against lower liquidity.
Past data shows that meme coins have rallied ahead of Christmas. If history repeats itself, lead meme tokens like Dogecoin could recover lost ground and make a comeback before the end of 2024.
Despite the recent pullback in meme coin prices, each of the tokens in the top five has yielded over three-digit gains for holders in 2024. This trend supports a thesis of price recovery and year-end rally for the category.
Technical Analysis and Future Predictions
Dogecoin is currently trading 22% below its 2024 peak of $0.48434. The target for the cycle is the May 2021 peak of $0.73995, with a key resistance on the path at $0.60000. RSI shows Dogecoin is currently overvalued, which is typically considered a sell signal. A short-term correction could send the meme coin to the buy zone between $0.29874 and $0.35740.
Shiba Inu declined nearly 23% from its December 2 top of $0.00003343. The target for the cycle is a March 2024 peak of $0.00004567, nearly 40% above the current price. The buy zone for Shiba Inu is between $0.00001983 and $0.00002259.
Bitcoin’s steep price decline pushed the meme coin category nearly 15% lower in market capitalization. Meme tokens typically react negatively to corrections in Bitcoin price. Traders need to watch the Bitcoin price trend closely for drops in meme coin prices this cycle.
The end of the altcoin season means that meme coins no longer lead gains among different crypto token categories. Traders need to pick meme coins with a strong community, liquidity, and relatively high market capitalization to protect against rug pull incidents and unprecedented losses.