The start of the second week in October saw Bitcoin [BTC] break through resistance to challenge the crucial $64K level, rebounding strongly from last week’s brief dip when it hovered around $58K.
This period witnessed significant surges in popular memecoins, some even registering triple-digit gains as money moved away from Bitcoin.
Despite this initial surge, many of these memecoins are now below their previous peaks, indicating a potential phase of distribution as attention shifts back to BTC in the market.
With Bitcoin on the rise again and most high-cap memecoins experiencing a decline, CryptoCrypto detects a trend that suggests the possibility of the memecoin craze entering its final phase rather than heralding a new “supercycle.” Should this pattern persist, a broader market cooling-off period could be on the horizon.
Leading Memecoins Falling Behind
Recent data shows that the past week marked a cycle dominated by memecoins, with three out of every five coins driven by memes experiencing over a 30% surge within a week.
There has been a noticeable shift; while low-cap alternative coins traditionally gain traction when BTC hits a low, investors are now turning to high-cap memecoins for opportunities with higher risk and potentially higher rewards.
In essence, the recent correction in BTC prompted a movement of capital into these larger tokens. However, as traders secure profits, funds might soon flow into smaller, low-cap memecoins, akin to the surges seen in alternative coins after every peak in Bitcoin.
SHIB, the second-largest memecoin with a market cap exceeding $10 billion, has consistently outperformed Bitcoin, showing greater daily gains during each upward move on the daily price chart.
This increase can be attributed to a strategy traders employ during Bitcoin pullbacks, shifting their focus towards acquiring high-cap memecoins. Notably, there was a net outflow of 58 billion SHIB from combined exchanges in the past week.
However, with Bitcoin now surpassing a crucial resistance level, renewed confidence has led these investors to sell, resulting in an influx of 62 billion SHIB.
In conclusion, many top memecoins may be primed for a correction as Bitcoin prepares for its next rapid rise. Thus, the next phase of the memecoin cycle may begin once BTC nears a plateau around $66K.
Potential Surge in Low-Cap Tokens
Traditionally, a rise in BTC price spurs investors’ willingness to take on more risk, leading them to explore speculative assets like lower-cap memecoins.
Despite their higher volatility, these assets are considered enticing for quick and substantial gains, potentially leading to a short-term increase in demand.
An illustrative example is Mother Iggy [MOTHER], a celebrity Solana-based memecoin with a market cap of $85 million. The token has gained momentum, climbing over 5% in the past 24 hours to reach $0.83. This signifies a significant recovery from the 10% fall witnessed last week.
Historically, a similar trend emerged during the initial cycle when Bitcoin hit $62K, enabling MOTHER to test the $1 mark. If this trend continues, the memecoin could be on the brink of a bullish turnaround.
Overall, while major memecoins appear stagnant, smaller market-cap tokens are surging, echoing the pattern following a Bitcoin peak, where capital shifts towards smaller coins as larger investors redistribute their holdings.