Happy holidays and welcome back to Distributed Ledger! This is Frances Yue, crypto and markets reporter at MarketWatch.
The battered meme coin space is seeing a new star.
Most meme coins have been significantly underperforming major crypto such as bitcoin and ether this year. Dogecoin DOGEUSD, +0.36% saw a 30% rise so far this year, while Shiba Inu SHIBUSD, 0.30 went up 28.3%, versus an over 160% increase of bitcoin BTCUSD, +0.46% and a 85% rise of ether ETHUSD, +0.73% year-to-date.
However, the recent surge of Bonk, a dog-themed meme token based on Solana, has caught increasing attention.
Bonk, which was launched in December 2022, surged over 300% over the past 30 days and scored an over 1,000% gain since the start of September, making it the best-performing meme coin in recent months. The coin is still trading at a fraction of a cent.
I caught up with Dessislava Aubert, senior analyst at Kaiko Research, to find out why.
Find me on X at @FrancesYue_ to share any thoughts on crypto or this newsletter.
The Bonk rally
While it is difficult to pinpoint the exact reasons for Bonk’s rally as the trading of meme coins is highly speculative, the listing of the crypto on several crypto exchanges including Coinbase and Crypto.com last week, seems to have boosted its price and trading activity, Aubert said.
Bonk’s 24-hour trading volume rose above $ 1 billion at one point last week, well above other meme coins, before falling back to about $ 426 million on Wednesday. Dogecoin’s trading volume for the past 24 hours stands roughly at $ 592.4 million.
Bonk’s surge is also in part driven by a resurgence of Solana, which took a hit after crypto exchange FTX collapsed last year, as the company’s now infamous co-founder Sam Bankman-Fried was a big supporter of the blockchain, noted Aubert.
As the crypto space starts to see a comeback of investor interests, “sentiment on Solana has improved a lot and it is increasingly seen as a real competitor to Ethereum,” Aubert said.
The total value locked on Solana rose to about $ 1.2 billion from around $ 300 million in October, according to data from DefiLama.
The macroeconomic environment also provided a tailwind, noted Aubert. Inflation has been moderating and traders have been increasing their bets on Fed rate cuts in 2024, while the U.S. economy appears resilient.
“We’ve seen an Improvement in the environment for risk assets. A lot of more speculative pockets of the market started rising in November,” Aubert said.
To be sure, the trading of meme coins is highly speculative and lightly regulated, if not unregulated. Many cryptocurrencies lost over 90% of their value during the market crash in 2022.
SEC denies Coinbase’s petition
The Securities and Exchange Commission denied a petition that Coinbase made last year, demanding the agency bring “regulatory clarity” to crypto markets and draft new, tailored rules for the industry.
“There is nothing about the crypto securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws,” SEC Chair Gary Gensler said in a statement last week.
The SEC in June charged Coinbase with operating an unregistered national securities exchange, brokerage and clearing agency.
MarketWatch’s Chris Matthews wrote more about it here.
Crypto in a snap
Bitcoin gained 2.9% in the past seven days and traded at around $ 43,638 on Wednesday, according to CoinDesk data. Ether ETHUSD, +0.73% edged up 0.1% during the same period, to about $ 2,190.
Must-reads
- A big, messy crypto ‘cleanup’ could pave way for new guard to take over in 2024 (MarketWatch)