Is it meme coin season again?
what was the most popular cryptocurrency of 2021? if you were to guess one of the two premier coins in the space, Bitcoin or Ethereum, you’d be wrong. if you kept up with the news trends and Elon’s viral shilling, you’d perhaps say Doge and would be closer to the mark but again wrong. it was none other than self proclaimed “Doge killer”, Shiba Inu, which beat Bitcoin by 43 million views (188 million vs 145 million) on popular indexing website Coinmarketcap. Doge was third, with over 107 million views.
that popularity is once again paying off in the markets. across a 24-hour period between February 6 and 7, Shiba Inu registered a price jump of nearly 30%. meanwhile Dogecoin has risen over 25% in four days from February 4 to 7. what’s behind this meme coin rally?
the simple answer here is Bitcoin. when the crypto market cap leader fell below its technical support levels at the beginning of January, most others including meme coins plunged. now Bitcoin has made a positive crossing of its 50 Day Moving Average (50 DMA) for the first time in over two months, signalling a bullish period ahead. its price surged from around $38,000 on February 4 to as high as $43,500 on February 7, crossing the important resistance level of $40,000 which now acts as a support. the next level to watch out for appears to be $44,500, and if Bitcoin manages to break past and register a close on the daily chart above that level, it would be a confirmation of a technical pattern called a “bull flag”.
as an interesting side note, Ethereum and Solana suffered a dip in between due to a “wormhole” exploit of a blockchain protocol that allows transfers across the two chains. the $323 million hack led to a downward trend in the prices of both, but they have since recovered to match the market sentiment.
most crypto coins follow the price trends of Bitcoin, but on varying scales. the affordability of meme coins makes them more appealing to smaller and newer investors. thus when Bitcoin shows bullish signs, it is these smaller coins that show large gains with investors rushing in to grab sizable bags. those that managed to buy the dip (the actual one right at the bottom) are sitting on healthy gains right now and can perhaps afford to hold on for more. those looking to enter at current prices might need to be wary of the market setting a “bull trap” for Bitcoin.