Bonk had a 300% rally in 30 days. Factors driving the surge in meme coins include:
Happy holidays and welcome back to distributed ledgers! I’m Frances Yue, a cryptocurrency and markets reporter for MarketWatch.
The battered meme coin space is seeing a new star.
Most meme coins have significantly underperformed major cryptocurrencies like Bitcoin and Ethereum this year. DogecoinDOGEUSD,
While Shiba Inu SHIBUSD has risen 30% so far this year,
Bitcoin is up 28.3% compared to BTCUSD, which is up more than 160%.
Ethereum ETHUSD rose 85%.
From the beginning of this year to present.
However, interest is growing recently with the proliferation of Bonk, a dog-themed meme token based on Solana.
Bonk, launched in December 2022, has surged more than 300% in the past 30 days and has become the best-performing meme coin in recent months, with gains of more than 1,000% since early September. This coin is still trading for less than 1 cent.
I met Dessislava Aubert, senior analyst at Kaiko Research, to find out why.
Find me on X @FrancesYue_ I’d like to share your thoughts about cryptocurrency or this newsletter.
Bonk Rally
Because trading in meme coins is highly speculative, it is difficult to pinpoint the exact reason for Bonk’s rally, but price and trading activity appears to have been active following the cryptocurrency’s listing on several cryptocurrency exchanges, including Coinbase and Crypto.com, over the past week. . Ober said.
Bonk’s 24-hour trading volume exceeded $1 billion at one point last week, well above other meme coins, before falling to around $426 million on Wednesday. Over the past 24 hours, Dogecoin’s trading volume is approximately $592.4 million.
Bonk’s surge is also partly due to the resurgence of Solana, which took a huge hit after the collapse of cryptocurrency exchange FTX last year. That’s because its now-infamous co-founder, Sam Bankman-Fried, was a big proponent of blockchain, Aubert said.
As the cryptocurrency industry begins to rekindle investor interest, “sentiment toward Solana has improved a lot and is increasingly seen as a true competitor to Ethereum,” Aubert said.
The total value locked in Solana increased from about $300 million in October to about $1.2 billion, according to data from DefiLama.
The macroeconomic environment also provided a tailwind, Aubert noted. Inflation is moderating and traders are increasing bets on a Federal Reserve interest rate cut in 2024, while the U.S. economy appears resilient.
“We have seen the risk asset environment improving. “Starting in November, we started seeing more speculative money rise in the market,” Aubert said.
To be sure, trading in meme coins is highly speculative and unregulated or lightly regulated. Many cryptocurrencies lost more than 90% of their value due to the 2022 market crash.
SEC Denies Coinbase Petition
The Securities and Exchange Commission (SEC) rejected Coinbase’s petition last year calling for it to bring “regulatory clarity” to the cryptocurrency market and draft new custom rules for the industry.
“There is nothing in the cryptocurrency securities market to suggest that investors and issuers are entitled to less protection under the securities laws,” SEC Chairman Gary Gensler said in a statement last week.
Last June, the SEC charged Coinbase with operating an unregistered national securities exchange, brokerage and clearing agency.
MarketWatch’s Chris Matthews wrote more about this here.
Cryptocurrency in an instant
Bitcoin is up 2.9% over the past seven days and was trading at around $43,638 on Wednesday, according to CoinDesk data. Ethereum ETHUSD,
During the same period, it rose 0.1% to $2,190.
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