In late 2024, the world witnessed a craze for crypto meme coins. Token prices, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), skyrocketed as speculators hopped on the hype wagon. Even relatively unknown coins like Dogewithhat, Fartcoin, and Bonk received surprising attention. Yet, into 2025, it seems to be losing steam.
Data from S&P Global Market Intelligence indicates that the market has a serious concern: Dogecoin dropped 10.4% last week, Shiba Inu fell 11.7%, and Pepe fell a whopping 19.9%. The cracks are beginning to show in the crypto meme coin market, and it may just be the beginning.
Macro Factors Behind Crypto Meme Coins Crash
The performance of cryptocurrencies, especially meme coins, is often a reflection of the broader market. In 2022, for example, the stock market crash had a significant impact on cryptocurrencies. Dogecoin, which peaked in 2021, has been unable to regain its former glory.
Fast forward to late 2024, a hot market sparked renewed interest in crypto. Post-election optimism over the possibility of more crypto-friendly regulations added fuel to the fire. Meme coins rallied, riding the speculative excitement. However, the surge was not driven by tangible developments. Transactions for Dogecoin and Pepe remain stagnant, and there are no groundbreaking apps or utilities tied to these tokens. Simply put, as the memes fade, so does their value.
Why the Recent Downturn?
The recent sell-off in crypto meme coins reflects a broader market correction. Positive economic data, such as increased job availability and improved business sentiment, shifted investor focus. Ironically, strong economic news often works against risk assets like cryptocurrencies. When the Federal Reserve has fewer reasons to lower interest rates, growth stocks, and high-risk assets tend to decline.
Meme coins, being speculative assets, have felt the brunt of this shift. The decline in growth stocks has exacerbated their drop, underscoring their vulnerability to macroeconomic changes.
The Meme Era’s Uncertain Future
The excitement surrounding meme coins after the election was undeniable, but entering 2025 shifts the narrative. With a new Congress and President-elect Donald Trump set to assume office on January 20, regulatory clarity will be a determinant of what will happen to the future of cryptocurrencies. Though blockchain technology has massive potential, it is unclear how meme coins such as Dogecoin and Bonk will be faring shortly.
Hype sells in the crypto meme coin market, but reality often makes the adorableness wear off in quite a short time. There is always a chance that the mass risk-taking on the risks of meme coins might be related to an upsurge in prize return in the months ahead, or maybe their role in the crypto market will take on entirely different characteristics.
Also, see: Bitcoin drops below $98,000: Here is why