With the commencement of the Federal Reserve’s easing cycle, there is a possibility that memecoins might emerge as strong contenders in the market and even surpass the DeFi sector in performance during Q4. This optimistic perspective was shared by Toe Bautista, a research analyst at GSR, a crypto trading and liquidity provider.
Bautista expressed his view to Blockworks, stating that a renewed interest in speculative trading could significantly enhance the prospects of memecoins.
“The strength of memecoins could be sustained due to the recent upsurge in speculative interest.”
Memecoins versus DeFi
Bautista also mentioned that memecoins might outshine DeFi, mainly because the latter is grappling with uncertainties surrounding regulations, particularly in anticipation of the US elections.
“Conversely, DeFi finds itself in a delicate position. If Trump secures another term, there could be a relaxation in regulations, leading to potential outperformance in the DeFi sector. However, a victory for Harris might bring about persisting regulatory challenges.”
To sum up, while memecoins could experience a substantial surge in the near future, their ability to outperform DeFi is contingent upon the outcome of the US elections.
In the year-to-date (YTD) performance, Popcat [POPCAT] emerged as a standout performer, exhibiting gains of nearly 10,000% at the time of reporting. Similarly, dogwifhat [WIF] and Pepe [PEPE] witnessed triple-digit growth over the same timeframe.
Nonetheless, a recent report from Bernstein highlighted the potential for the DeFi sector to thrive as traditional financial interest rates decline.
The analysts at Bernstein emphasized that DeFi yields could exceed 5%, surpassing returns from US money market funds and benefiting key players such as Aave [AAVE], Uniswap [UNI], and Aerodrome Finance [AERO].
Despite this, memecoins maintain a robust presence in the market. Having dominated in Q1 and Q2, memecoins continue to lead in YTD performance. In contrast, DeFi holds the fifth position with an average gain of 51% per Artemis data.
The Federal Reserve’s recent shift is expected to heighten speculation in memecoins and bolster interest in DeFi yields, potentially enhancing returns for both categories. Nevertheless, the impact of the upcoming US elections on their performance remains uncertain.