Meme coins are experiencing significant declines in a high-volume trading environment as the closely monitored crypto fear and greed index slips into the fear zone.

The total market capitalization of all cryptocurrencies has dropped by 25% in the past 24 hours to $29.8 billion. Earlier this year, these tokens had a market valuation exceeding $63 billion, indicating a loss of $33.8 billion for investors.

Meme Coins Facing Major Losses

Dogecoin (DOGE), Shiba Inu (SHIB), Pepe, Dogwifhat (WIF), and Bonk (BONK) have all crashed by over 23% on Monday. Other popular tokens like Floki (FLOKI) have fallen by more than 30%.

This widespread sell-off occurred in a high-volume environment, with many traders liquidating their positions. Data indicates that the 24-hour trading volume surged by 170% to over $9.72 billion.

Falling Futures Open Interest

At the same time, the open interest in the futures market for these meme coins has continued to decline. Pepe’s open interest now stands at $93.61 million, down from last month’s high of $146 million. Dogecoin’s open interest has also fallen to $536 million, a decrease from its peak of over $757 million in July.

The futures open interest for other meme coins like WIF, Bonk, and Shiba Inu has also been declining steadily.

Volatility and Market Sentiment

Meme coins tend to be more volatile than Bitcoin because they are often held by retail traders seeking quick profits. These traders typically pump the prices higher when Bitcoin is rising and sell off rapidly during downward trends.

Additionally, meme coins tend to underperform the broader market when the fear and greed index is in the fear zone. This index has dropped from over 90 earlier this year to a fear level of 35 as sentiment in the crypto industry continues to deteriorate.

“The fear and greed index has a significant impact on meme coin performance.”

It’s important to note that this recent sell-off is not limited to the cryptocurrency market; the stock market is also experiencing declines. For instance, Nvidia, one of the largest companies by market cap, dropped by over 14% on Monday, while Apple saw a decline of more than 5%.

Historically, stocks tend to rise in the long term, suggesting that cryptocurrencies may also rebound when the broader market recovers. Additionally, meme coins could benefit if the Federal Reserve begins to cut interest rates as inflation concerns grow.

Meme Coins: Oversold and Potential for Rebound

Many meme coins have become severely oversold, which could lead to a rebound in the coming weeks. Pepe’s Relative Strength Index (RSI) has dropped to the oversold level of 25, while the Percentage Price Oscillator (PPO) has remained in the red for six consecutive days.

Similarly, Dogecoin’s RSI has fallen to 24, with the MACD and PPO also reaching oversold levels. This trend is consistent among other tokens like WIF and Popcat.

When an asset is oversold, it can either continue to decline due to momentum or bounce back as investors buy the dip. Keep an eye on these indicators to gauge potential market movements.

For more updates on the latest in cryptocurrency, investing, and finance, visit Global Crypto News.

Post Views: 9