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The crypto market is going through a major redistribution phase. While Ethereum attracts the majority of capital and focuses investors’ attention, memecoins are losing ground, seeing their dominance crumble. Dogecoin, Shiba Inu, and Pepe struggle to keep pace. Should this be seen as an end of cycle or just a lull before a new explosive rally?
In brief
- Memecoins dominance reaches its lowest level since February 2024, falling to 0.039.
- Ethereum massively captures market liquidity, overshadowing meme crypto performances.
- Experts identify a four-phase cycle, with an explosive ‘altseason’ to come that could revive memecoins.
- Experts identify a 4-phase cycle, the ‘altcoin season’ could revive memecoins.
Ethereum’s hegemony disrupts the crypto ecosystem
The dominance of memecoins in the altcoins market is dangerously eroding. According to CryptoQuant, this critical indicator has dropped to 0.039. A level not seen since February 2024, 18 months earlier.
This plunge is mainly due to the massive liquidity suction by Ethereum. The world’s second biggest crypto monopolizes investors’ attention and drains capital towards its ecosystem.
“It’s clearly not meme season right now,” analysts summarize on social networks. And the figures back them up. Since early August, Ethereum has gained +25.41%, while the main memecoins struggle to show double-digit performances.
This “Ethereum season” coincides with the massive arrival of institutional capital. BlackRock injected 640 million dollars in one day into its Ethereum ETF. BitMine Immersion added 300,000 ETH to its reserves in one week. These titanic flows create a suction effect that deprives memecoins of the liquidity needed to take off.
A predictable cycle towards memecoins explosion?
Despite this dark picture, memecoins’ story could see a new twist. Crypto experts have identified a recurring four-phase cycle governing sector rotations. Currently in phase 2, the market sees Ethereum dominate bitcoin and other altcoins.
“We have been waiting for this moment for years. Now it is here. ETH just entered phase 2: Ethereum season.” explains Merlijn The Trader.
This phase will be followed by a third step where large-cap altcoins will start their ascent, before the ultimate phase: the altseason.
This fourth phase represents the Holy Grail of crypto investors. It is characterized by widespread euphoria successively affecting large-cap altcoins, then medium and small caps.
Memecoins, traditionally the last to take off, then benefit from an explosion of volumes and prices.
Technical analysis supports this cyclical vision. The comparative performances of August perfectly illustrate this hierarchy: Ethereum shows +25.41%, while Dogecoin manages only +10.48%, Shiba Inu +4.58%, and Pepe +7.31%. A gap that could abruptly reverse in the final phase of the cycle.
The fall in memecoins dominance marks less an end than a strategic transition. This rotation towards Ethereum could be the prelude to a historic altseason. It remains to be seen whether the increasing institutionalization of the crypto market will permanently change these traditional cycles or simply delay their timing.
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Passionné par le Bitcoin, j’aime explorer les méandres de la blockchain et des cryptos et je partage mes découvertes avec la communauté. Mon rêve est de vivre dans un monde où la vie privée et la liberté financière sont garanties pour tous, et je crois fermement que Bitcoin est l’outil qui peut rendre cela possible.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.