The once-booming meme coin market is experiencing a slump, with major players like Dogwifhat (WIF), Pepe (PEPE), and BONK suffering significant price drops over the past week. The sector’s total market capitalization has shrunk by 5%, reflecting a decline in investor confidence.
WIF Leads The Downturn with Short Sellers Piling In
WIF, the meme coin with the biggest fall among the top five by market cap, has seen its value plummet by 20%. Currently trading at $1.48, WIF hit a weekly low of $1.45 on Thursday before staging a minor recovery. This downturn has attracted short sellers, who are betting on WIF’s price to decline further. Negative funding rates in WIF’s perpetual futures contracts indicate that more traders are placing short positions.
Technical indicators also paint a bearish picture for WIF. Its Relative Strength Index (RSI) sits at 38.22, suggesting significant selling pressure. If this trend continues, WIF’s price could drop to $1.07. However, a market sentiment shift and a surge in demand could see it rebound to $1.96.
Pepe Faces 23% Drop as Selling Pressure Mounts
The frog-themed PEPE is not faring any better. Its value has dipped by 14%, with the coin currently trading at $0.0000075. The declining Accumulation/Distribution (A/D) Line and Chaikin Money Flow (CMF) point towards rising selling pressure. This suggests that investors are offloading PEPE, potentially leading to a further 23% price drop to $0.0000058. A surge in buying interest could, however, push the price up to $0.0000085.
Also Read: Dogwifhat (WIF) Price Crash – RSI, MACD, And Long/Short Ratios Forecast Further Decline
BONK Risks “Death Cross” Pattern Formation
Another meme coin in the red is BONK. While not as severe as WIF and PEPE, BONK has still seen its price fall by 11% this week. Technical analysis reveals a potential “death cross” forming on BONK’s one-day chart. This pattern, where the 50-day simple moving average (SMA) dips below the 200-day SMA, is often interpreted as a bearish signal, indicating a weakening short-term rally and a potential shift towards a downtrend. If this pattern materializes and selling pressure increases, BONK’s price could drop to $0.0000015. Conversely, a change in the moving averages due to a demand uptick could see BONK climb to $0.000022.
The recent decline in the meme coin market raises questions about the sustainability of this asset class. While meme coins can experience explosive growth due to hype and social media trends, their volatility also makes them susceptible to sudden price drops. Whether this is a temporary setback or a sign of a more prolonged correction remains to be seen. Investors considering meme coins should be aware of the inherent risks involved and conduct thorough research before making any investment decisions.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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