Memecoins lead crypto rebound as Solana-based DeFi recovers
Quick Take
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The cryptocurrency market has rebounded since Monday’s downturn, with Solana-based memecoins leading the price increase.
- The Block’s GMCI index for memecoins shows the sector has increased by over 6% over the past 24 hours.
The crypto market, and memecoins in particular, have experienced a significant rebound after Monday's downturn, with Solana-based memecoins and cat-themed memecoins both seeing notable gains in market capitalization over the past 24 hours.
"The market seems to be stabilizing in what seems to be a second positive day of trading, with volatility greatly diminished yesterday and trading volumes are back to normal after being three times higher on Monday than any other day this month," BRN analyst Valentin Fournier told The Block.
The Chicago Board Options Exchange's CBOE Volatility Index (VIX) spiked to over 60 points on Monday, according to MarketWatch data, but has since eased to a current reading of 23.61 points.
With the U.S. economy displaying recessionary indicators, including an unexpectedly weak jobs report last Friday that revealed slower hiring in July, the Federal Reserve is under pressure to act on interest rates.
"Such a cut could create a supply shock that would kickstart the American economy and put it back on track, pushing investors towards riskier assets," Fournier said.
Memecoins rally across the board
Major memecoins in both categories have posted double-digit gains. Dogwifhat has increased by 26%, Popcat is up 35% and Michi has risen 30%. The top three memecoins by weight — Dogecoin, Shiba Inu and Pepe — also increased 3.9%, 2.6% and 6.89%, respectively.
Meanwhile, the PolitiFi memecoin market cap today stands at $589 million, having gained 18% in the last 24 hours, according to CoinGecko data. Major movers in the memecoin subsector, Elon Trump (ticker: EL) and MAGATrump (ticker: MAGATRUMP), have increased by 38% and 51%, respectively, in the past 24 hours.
PolitiFi is a memecoin category featuring tokens named after political figures, although these tokens have no official affiliation with any of them.
On Tuesday, Kamala Harris announced 60-year-old governor of Minnesota Tim Walz as her running mate in the U.S. presidential election race. On the same day, a misspelled Solana-based memecoin called Tem Walz (ticker: WALZ) briefly surged to a market cap of nearly $1 million before plunging to less than $254,000 within hours.
In the midst of Tuesday's volatility, TrumpCoin (ticker: DJT) plummeted over 90% after a single wallet sold $2 million worth in one transaction, reducing its market cap to $3 million from $55 million. It has since gained around 2% in value.
The Block's GMCI index for memecoins shows the sector increased 6.42% to 208.95 points in the past 24 hours.
Analysts point to trade opportunities amid Solana rebound
After the recent market turmoil, K33 analysts have pointed to opportunities for trades that could generate short-term profit, particularly Solana mean reversion plays.
Following significant market panic on Sunday and Monday, K33 Research says altcoins like Solana are strong candidates for a mean reversion play. This investment strategy speculates that when an asset's price deviates substantially from its historical average or expected value, it is likely to return to that average level eventually.
"Solana is showing strength and if looking for longs, SOL is a clear option. If looking for a higher risk beta play, Solana memecoins put in some of the largest bounces after the dust had settled," K33 Research analysts said in Wednesday's report. They added that the SOL-ETH price has made an all-time high since Monday's downturn, while the SOL-BTC price has also rallied.
K33 analysts also highlighted some uncertainties to be aware of regarding recent developments in the Solana ecosystem.
"Crypto investment and development firm Jump Crypto, one of Solana’s most influential supporters, is rumored to be ceasing its market making business in the digital asset space. On-chain history shows Jump Crypto has been shifting huge sums of its assets, unstaking $500 million of its ether over the last 2 weeks," the K33 analysts added.
Solana was changing hands at around $154.10 at the time of writing, having increased in value by over 11% in the past 24 hours, according to The Block’s SOL price page.
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