The current crypto market cycle, which is undergoing a heavy pullback, has largely been driven by meme coin mania and spot Bitcoin ETF hype.
On May 1, economist and trader Alex Krüger shared his thoughts on what has been a rather bizarre crypto market cycle.
Meme coins have dominated the narrative, alongside bitcoin following the ETF launches, he observed.
However, most of them have now dumped or gone to zero and meme coin scams were rife on the Solana and Base networks.
Nevertheless, large-cap meme coins “rank among the strongest performers of the year, still exhibiting significant returns despite the correction,” he said before adding.
“Meme coins have established themselves as a viable asset class in their own right.”
Some thoughts on the current crypto cycle
#1 The crypto cycle has been almost entirely driven by the bitcoin ETF.
#2 ETH has been a major disappointment, but it has performed well overall for stakers and airdrop farmers.
#3 Solana established itself as the chain of choice for…
— Alex Krüger (@krugermacro) May 1, 2024
Meme Coin Madness
According to CoinGecko, the total market capitalization of all meme coins is around $46 billion, which is more than Ripple (XRP) and Cardano (ADA) combined. They represent roughly 2% of the total crypto market.
However, there is a dark side to this madness as the market “started to get flooded with both scammy meme coin launches and cash-grabbing founders around February,” observed Krüger.
“These founders focus on making a quick buck and generating short-term hype rather than on longevity.”
They also spurred a division among the crypto community with some believing they bring value to the ecosystem while the opposing view is that meme coins undermine the ideals and purpose of crypto.
The trader also said that there has been “barely any new retail coming into crypto.” It has been predominantly ETF buyers and “previous cycle participants redeploying and going out the risk curve.”
Sentiment Slumps
Crypto market sentiment has slumped, with the Bitcoin correction hitting 23% in a dip below $57,000 yesterday.
However, this pullback was expected. It has happened many times before, and could well go as low as 30%. Fellow trader Bob Loukas saw the irony in it.
Logged back in to check sentiment. Good.
Maxi’s last 9 months. “ETF bro, never going to see a pullback. Up only.
Maxi’s today – “30% pullbacks in a bull market are normal”.
Never gets old.
Expect more weakness into May 16-20th.
— Bob Loukas 🗽 (@BobLoukas) May 1, 2024
Bitcoin investor ‘CRG’ said nothing has changed macro-wise or fundamental-wise, adding:
“IMO, BTC is nowhere finished and will be $100k+ much sooner than ppl expect. That’s when the real altcoins gains will be made.”
When that happens, for good or for bad, meme coins are likely to go on a rampage again.
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