What Do You Meme? An Analysis On the Three Largest Assets in the Space

Memecoins are a type of cryptocurrency that often rise in popularity thanks to internet culture and social media, but their prices can be very unpredictable. Dogecoin (DOGE) was one of the first memecoins, debuting in December 2013 as a joke, but it surged in value in 2021 when online communities rallied behind it. Many early buyers made huge profits, turning a small investment into millions of dollars, but those who bought when the price peaked ended up losing a lot of money when the price dropped.

Following Dogecoin's success, other memecoins like Shiba Inu (SHIB), which launched in August 2020, and Pepe (PEPE) in April 2023, also saw massive price surges. Similar to DOGE, these coins attracted traders hoping to strike it rich. Some people made incredible gains, but others who invested at the highest prices found themselves facing significant losses when the excitement faded and prices came crashing down. The power of crowd emotions—often referred to as FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt)—has played a huge role in these price movements.

Sentiment is one of the biggest factors driving the price of memecoins.

When excitement and FOMO reach their peak, it's often a sign that the price is about to top out, as too many people rush in to buy at once. Conversely, when FUD sets in and fear dominates, prices tend to bottom out, and some traders see this as an opportunity to buy. The rollercoaster-like nature of memecoins is driven by these emotional swings, and even though Dogecoin started as a joke, its massive success has helped create an entire sector of cryptocurrency based on humor and speculation just over a decade later.

So with this said, let's take a look at Santiment's on-chain and social metrics to break down the top 3 meme coins by market cap. We will take a look at MVRV, whale/retail accumulation, and crowd sentiment for each:

Dogecoin ($DOGE): #8 Marketcap

In terms of average trading returns, the short-term traders (those that have been active in the past 30 days) are showing just a slight profit (+1.7%). However, long-term traders (those active in the past 365 days) are down near their lowest levels in the past year (-20.8%). With prices dropping significantly since its top in mid-April, there is an argument for a price rebound to bring this long-term deficit back to break-even.

Retail traders have been very indecisive about Dogecoin throughout 2024. Wallets with less than 1M DOGE hold a combined 11.8% of the memecoin's supply. This is essentially at the exact same level they were at the beginning of the year. Therefore, there aren't concerning signs of FOMO in this chart to indicate that small traders (those who typically get burned when they buy in masses) are accumulating.

There was a mid-August craze in all memecoins due to Tron's launch of the new SunPump platform. DOGE was one of the many assets that benefitted from this sector-adjacent news, but prices did not really react. As of now, the ratio of DOGE's discussions vs. all crypto discussions is quite low (just 1.28%). And sentiment is break-even. It is a good sign that FOMO has quickly settled down, and if we begin to see impatience and FUD next, it would be a good sign of a turnaround.

Shiba Inu ($SHIB): #13 Marketcap

Shiba Inu has essentially performed as a worse performing Dogecoin in 2024. The 30-day average trading returns are down just slightly at -1.1%, while the long-term returns are down a whopping -31.7%. This sets the 13th ranked memecoin up to potentially perform very well once Bitcoin is able to stabilize and altcoins are able to flourish again.

Unlike Dogecoin, Shiba Inu is seeing its retail traders showing tremendous relief. As the teal line shows in the chart below, the percentage of supply held by wallets with less than 1B SHIB is at its lowest level since November, 2022. This indicates a tremendous level of FUD occurring on the network, with large 1B+ wallets holding the vast majority.

The level of social discussion toward SHIB has been extremly low since late July, and has basically been on the decline all year long. This reflects a sense of indifference and frustration from traders, which makes sense when understanding how much smaller retail traders have been dropping out of the asset like flies. Sentiment, similarly, is showing a slight negative bias.

Pepe ($PEPE): #25 Marketcap

Pepe, the more recent "darling" among memecoin traders, has had its share of rises and falls during the rollercoaster 2024 crypto market fluctuations. Unlike Dogecoin and Shiba Inu, its market cap is still up approximately 50% over this 5-month bloody stretch for cryptocurrency. On a more recent basis, 30-day traders are down -0.8%. But average 365-day returns sit at +23.8%, indicating that there is still a bit of profit that patient traders may need to wait to see evaporate before there is a clear buy signal.

Pepe retail traders have actually been showing tons of confidence over these past 3 months. Wallets with under 1M Pepe have been gaining their portion of the available supply, using each dip as an opportunity to accumulate more. Unfortunately, this is not an ideal setup. We would rather see the opposite result where retail traders are dropping out and whales are scooping up the loose coins being sold off by them.

Despite the retail accumulation that we see in the above chart, the sentiment toward Pepe is extremely negative. This could be chalked up to the fact that PEPE's more recent entry into the crypto space means its traders and hodlers really haven't seen a lot of price drops like what we've since its top in late July. You'll also notice the glaring drop in discussion rate toward the memecoin ever since its top. Price speculation will return, but for now traders have been eerily silent.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.