Meme Coin Trading Volume Surges to Two-Year High, Signals Caution for Bitcoin Bulls

Speculative mania in meme coins has historically presaged bearish reversals in bitcoin.

AccessTimeIconMay 8, 2023 at 10:13 a.m. UTC

Trading volume in meme coins, or cryptocurrencies originating from internet memes and having no inherent utility, surged last week in a move reminiscent of frenzied activity observed ahead of previous bitcoin (BTC) market tops.

The crypto market saw $2.3 billion in meme coin trading volume last week – a six-fold rise from the preceding week's $387 million to the highest since May 2021, according to blockchain observer James Tolan's Dune analytics-based tracker.

The speculative mania was led by pepecoin (PEPE), a frog-themed token launched in mid-April with a maximum supply of 420 trillion. PEPE crossed $1 billion in market capitalization on Friday, eventually peaking at $1.82 billion, a staggering achievement for a three-week-old meme cryptocurrency. At press time, PEPE's market cap stood at $931 million, per Coingecko.

The PEPE frenzy also spurred speculation in other low-cap tokens like DINO, WSB, CHAD and 4TOKEN, which rose by several hundred percent in the past two weeks.

Historically, speculative mania in non-serious cryptocurrencies has presaged major market tops or bearish reversals in bitcoin, the leading cryptocurrency by market value.

Speculative frenzy in meme tokens has historically marked major bitcoin tops. (Source: James Tolan, Dune Analytics)
Speculative frenzy in meme tokens has historically marked major bitcoin tops. (Source: James Tolan, Dune Analytics)

Bitcoin traded near $27,970 at press time, representing a 2% drop on the day, despite the weakness in the dollar index (DXY). Bitcoin usually moves in the opposite direction of the dollar index, which gauges the greenback's exchange rate against major currencies, including the euro.

The DXY saw a brief bounce to 101.75 on Friday following the release of surprisingly strong U.S. jobs data, but since then has fallen back to under 101.20.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.