Memecoins like Dogecoin (DOGE), Shiba Inu (SHIB) and Pepe (PEPE) are among the cryptocurrencies underperforming the market on May 6, highlighting a diversion from the momentum that drove the sector higher last week.
Data from CoinGecko shows that the total market capitalization of memecoins has dropped in the last 24 hours, falling 2.7% to $55.48 billion.
Bonk (BONK) declined the most, losing 6% of its market value over the last 24 hours. Floki (FLOKI) followed with a 3.3% loss, and Memecoin (MEME) came in third after declining 3% over the same period.
Performance of top-cap memecoins. Source: CoinGecko
DOGE – the leading meme token by market capitalization – saw a 2.1% price decline on the day, bringing its market cap to $22.74 billion. Notably, DOGE still accounts for nearly 41% of the memecoin sectors’ ’ total market share.
Its rival, SHIB, was also correcting on May 6, down 2.4% on the day, decreasing its market cap to $14.29 billion, cementing its position as the second most popular memecoin.
Let’s look at some of the reasons why memecoins are down today.
Weak altcoin market structure
From a historical perspective, the bull market is usually driven by a rally in altcoins. However, in line with the current correction of memecoin prices, TOTAL3 – the total market cap of all cryptocurrencies excluding Bitcoin (BTC) and Ether (ETH)- has experienced a pullback after its rally that began in October 2023.
The chart below shows that TOTAL3 has decreased by 15% since the first week of April to $661.41 billion. This pull-back has led to the appearance of a descending parallel channel on the weekly chart, as shown below.
Traders booked profits as the relative strength index (RSI) on the weekly chart became overbought after crossing 70 at the height of the Solana-based memecoin frenzy.
An RSI reading above 70 means the altcoins were becoming overvalued, so they embarked on a trend reversal or corrective pullback.
Total crypto market cap excluding BTC and ETH. Source: TradingView
Altcoins are still pursuing an extended downtrend, confirmed by TOTAL3’s downward movement inside a descending parallel channel. The RSI’s…
..
