Memecoins and Layer 1s lead relief rally after market sell-off
Quick Take
- The GML1 index showed noticeable strength, rising 15.4% for the week at its peak on Aug. 8.
- The following is an excerpt from The Block’s Data and Insights newsletter.
In the aftermath of last week's market-wide selloff—the most significant for Bitcoin since the November 2022 FTX collapse—the memecoin and Layer 1 sectors, represented by the GMMEME and GML1 indices, respectively, have emerged as standout performers during the subsequent relief rally, showing particular resilience.
The GML1 index experienced a 21.3% drawdown at its lowest point since early August, while the GMMEME index saw a 25% decline. For perspective, BTC and ETH recorded drawdowns of 16.6% and 23.9% at their lowest points during the same period.
As market selling pressure eased at the start of the new week, both GML1 and GMMEME indices demonstrated notable recoveries. The GML1 index, which includes top-performing Layer 1 coins like SOL, SUI and TON, showed noticeable strength, rising 15.4% for the week at its peak on Aug. 8. The GMMEME index, comprising memecoins such as WIF and PEPE, rebounded 14.8% during this period.
It's also noteworthy that the GMMEME index doesn't include some of the best-performing memecoins since the selloff, such as POPCAT or MEW.
For further comparison, since the selloff subsided on Aug. 5, BTC bounced by 14%, while ETH gained 10% as of Aug. 8. These figures highlight the outperformance of both the Layer 1 and memecoin sectors during the relief rally. The reason for the latter’s outperformance may boil down to its historically strong performance over the past year, with market participants betting on this trend to continue.
Meanwhile, the reason for the recent strength seen in Layer 1s could be more nuanced, potentially driven by upcoming catalysts for specific coins within the index, such as SUI's anticipated mysticeti upgrade.
The sustainability of this outperformance remains uncertain. Looking ahead, the question lingers on whether this sectoral outperformance will persist or is it merely a temporary phenomenon driven by market dynamics. Moreover, it is also unclear whether the market-wide relief bounce will persist or if prices will revisit last week's lows as the market and volatility normalize.
This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry’s most thought-provoking trends.
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