Meme coins, specifically Solana-based dogwifhat (WIF), have recently experienced a surge in popularity, surpassing other sectors such as DeFi and exchange tokens in terms of growth. This momentum is particularly evident in the rise of DOGE-tracked futures bets, which have reached a record $2 billion. However, some trading firms are cautioning against a potential pullback in gains due to signs of exhaustion in the price action of Bitcoin and Ether.
Despite the broader market remaining relatively stable ahead of the long weekend in the U.S., Europe, and parts of Asia, meme coins continue to dominate the conversation. Bitcoin (BTC) and Ether (ETH) have shown minimal movement, with Solana’s SOL and Cardano’s ADA experiencing slight declines, while Bitcoin Cash (BCH) has seen a 4% increase following its rally on Thursday.
According to data from CoinGecko, meme coins have surged by an average of 8%, outperforming more traditional sectors like decentralized finance and exchange tokens. The recent spike in meme tokens like WIF and floki (FLOKI) can be attributed to speculation surrounding the potential use of DOGE in an upcoming payment service by the social application X.
Furthermore, the rise in bets on DOGE-tracked futures points to expectations of increased price volatility, signaling a bullish sentiment among investors. However, trading firms are advising caution, noting that the exponential price rally in Q1 has raised concerns of exhaustion in the market. Risk reversals for ETH are negative, indicating a sense of fear among investors, while funding and forwards remain high, suggesting that speculators are willing to pay premium prices to maintain leveraged long positions.
In conclusion, while the overall outlook remains bullish, market participants are urged to exercise caution when utilizing leverage in light of the potential for a market correction.
