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The decline of Memecoin can largely be traced back to the launch of Donald Trump's official Memecoin just before his inauguration in January. This event created a speculative frenzy, leading many to believe that Memecoins and cryptocurrencies had entered a new era. However, the subsequent collapse of TRUMPToken and MELANIA, which fell by 85% and 94% respectively from their all-time highs, quickly changed market sentiment and exposed the underlying "scams."
The launch of these tokens drained liquidity from Memecoin traders and created significant losses. For example, LIBRA, promoted by Argentine President Javier Milei, surged to a market cap of $1.17 billion but crashed by 96% within six hours. This event, along with widespread allegations of insider trading, further eroded trust in the Memecoin market.
Data and Market Dynamics
According to Dune Analytics, the number of tokens launched on Pump.fun, a popular Memecoin platform, has decreased by 64.6% since its peak in January. The weekly graduation rate of tokens has also dropped to its lowest level since July 2024. "Graduation" refers to tokens reaching a certain market cap threshold, which was raised from $69,000 to $100,000 last year.
Some traders, including Loopify, founder of the crypto education platform Pluid, believe that the Memecoin cycle has ended. The data shows that the Memecoin boom has surpassed the peak of the last NFT bull market, with Pump.fun generating over $574 million in revenue since its launch in January 2024. In comparison, OpenSea, the most popular NFT market, has generated $943 million in revenue since its launch in 2017.
Criticism and Future Outlook
Critics argue that platforms like Pump.fun have not done enough to develop the market and have focused solely on profit. Solana Bateman, a pseudonymous trader and deployer of WIFToken, claimed that Pump.fun
However, Alon Cohen, co-founder of Pump.fun, acknowledged the imperfections of their model but emphasized the platform's principles of low entry barriers and simplicity, which he believes still hold value. He also highlighted the positive impact of standardized contracts in reducing the risk of malicious contracts.
Market Sentiment and Predictions
Despite the decline, some traders believe that the market has overreacted and predict a rebound. For example, 0xWinged, a pseudonymous Memecoin trader, expects Solana to recover to $170, with liquidity returning to the Memecoin space. Rennick Palley, founder of hedge fund Stratos, also believes that human nature's affinity for gambling will drive liquidity back into Memecoins.
However, others, like VanEck portfolio manager Pranav Kanade, expect funds to flow out of Memecoins and into more stable altcoins. This shift is partly driven by macroeconomic pressures, including a 17% drop in Bitcoin (BTC) since the launch of LIBRA and a 2.7% decline in the S&P 500 over the past month.
In summary, while the "game" of Solana Memecoin may have changed significantly, its future remains uncertain. The market's response to recent events will likely determine whether Memecoins continue to be a significant part of the crypto landscape.
