Memecoin madness subsides as Bitcoin fees return to normal
The memecoin fever seems to be waning as the prices of the popular ones like PEPE are on the way back. This is good news for Bitcoin users, but may not be for investors as crypto markets continue to correct.
The memecoin-fueled frenzy that clogged the Bitcoin network last week appears to have subsided. Also, the frog-themed PEPE memecoin that was the center of attention has lost 60% since its peak earlier this month.
PEPE rose from obscurity to an all-time high of $0.00000431 on May 5th. However, it has since dumped more than 60% in a fall to current prices of $0.00000172.
The memecoin is down 4.5% on the day, while the markets are up 1.7%. This suggests that the memecoin fever is over for the time being.
The coin’s market capitalization peaked at $1.6 billion before retreating to current levels of around $720 million.
Memecoin speculation fades
Speculators often sell some of their BTC and ETH holdings for high-risk memecoins. This appears to be what has happened recently as the top two fall back after months of gains, Bloomberg reported.
Commenting on PEPE, a trader at digital-asset manager Arca, Kyle Doane, said, “At the end of the day it’s a lottery ticket,” before adding: “This kind of trading is basically a centralized casino.”
The memecoin craze is likely to signal a local market top, which is often followed by months of moves for Bitcoin and its brethren. A similar scenario unfolded in May 2021 when Dogecoin (DOGE) led the memecoin boom.
Joe Rotunda, director of the enforcement division of the Texas State Securities Board, said:
“When the buzz wears off and the hype wears off, value tends to plummet and investors can suffer significant losses.”
Withdrawing memecoins can also be problematic due to liquidity issues. However, PEPE still has around $360 million in daily trading volume.
Bitcoin fees fall back
The Bitcoin network has taken a breather now that the meme coining craze is winding down. The number of pending unconfirmed transactions in the mempool has dropped to 242,837 as transaction fees stabilize.
Daily transactions remain high, over 600,000, according to BitInfoCharts data. Fortunately, average transaction fees have fallen back to around $3.76.
On May 8, fees soared to over $30 as demand for block space skyrocketed during the height of the BRC-20 and Ordinal listing craze.
BTC prices traded up 1.4% on the day to $27,191 during Monday morning Asian trade.
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