Happy Holidays and welcome back to Distributed Ledger! This is Frances Yue, crypto and markets reporter at MarketWatch.
The battered meme coin space sees a new star.
Most meme coins are significantly underperforming major cryptocurrencies like bitcoin and ether this year. Dogecoin DOGEUSD,
has seen a 30% increase so far this year, while Shiba Inu SHIBUSD,
rose 28.3%, compared to a rise of more than 160% for bitcoin BTCUSD,
and an 85% rise in ether ETHUSD,
years to date.
However, the recent wave of Bonk, a dog-themed meme token based on Solana, has attracted increasing attention.
Launched in December 2022, Bonk rose more than 300% in the past 30 days and has scored gains of more than 1,000% since early September, making it the best-performing meme coin in recent months. The coin still trades at a fraction of a cent.
I spoke to Dessislava Aubert, senior analyst at Kaiko Research, to find out why.
Find me at X on @FrancesYue_ to share your thoughts about crypto or this newsletter.
The Bonk Rally
While it is difficult to pinpoint the exact reasons for Bonk’s rally as meme coin trading is highly speculative, the crypto’s listing on several crypto exchanges including Coinbase and Crypto.com last week appears to be the price and trading activity. Aubert said.
Bonk’s 24-hour trading volume soared above $1 billion at one point last week, well above other meme coins, before falling back to around $426 million on Wednesday. Dogecoin’s trading volume over the past 24 hours is approximately $592.4 million.
Bonk’s rise is also partly driven by a resurgence of Solana, which took a hit after the crypto exchange FTX collapsed last year because the company’s now infamous co-founder Sam Bankman-Fried was a big proponent of the blockchain, Aubert noted.
As the crypto space begins to see a comeback from investor interests, “sentiment on Solana has improved a lot and it is increasingly seen as a true competitor to Ethereum,” Aubert said.
Solana’s total value rose to about $1.2 billion from about $300 million in October, according to DefiLama data.
The macroeconomic environment also provided a tailwind, Aubert noted. Inflation is moderating and investors have increased their bets on Fed rate cuts in 2024, while the US economy appears resilient.
“We have seen an improvement in the environment for risky assets. Many more speculative parts of the market started to rise in November,” Aubert said.
To be fair, the meme coin trade is highly speculative and little regulated, if not unregulated. Many cryptocurrencies lost more than 90% of their value during the 2022 market crash.
SEC denies Coinbase’s petition
The Securities and Exchange Commission denied a petition filed by Coinbase last year demanding that the agency bring “regulatory clarity” to the crypto markets and create new, tailor-made rules for the industry.
“There is nothing about the crypto securities markets that indicates that investors and issuers are any less deserving of the protections of our securities laws,” SEC Chairman Gary Gensler said in a statement last week.
The SEC charged Coinbase in June with operating an unregistered national securities exchange, brokerage and clearing house.
MarketWatch’s Chris Matthews wrote more about it here.
Crypto in an instant
Bitcoin is up 2.9% over the past seven days, trading around $43,638 on Wednesday, according to CoinDesk data. ETHUSD,
rose 0.1% to around $2,190 over the same period.
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