Why meme coins are fading amidst Bitcoin institutional adoption and gains this cycle

Meme coins have become among the most popular crypto narratives of 2024, creating a divide among crypto tokens. Bitcoin stands out among the top crypto tokens with a 125% year-to-date gain, and the meme coin category or “other tokens” has reached a major milestone, surpassing the $100 billion market cap.

The three largest meme coins, Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), have erased 11% to 13% of their value in the past week. Bitcoin is consolidating near $95,000, almost 12% below its all-time high of $108,353.

Bitcoin and meme coins are the most popular narrative of 2024

Meme coins have caught the attention of most crypto investors and emerged as a popular narrative this year. A CoinGecko report updated Monday states that the meme coin narrative captured a total of 30.67% of global investor interest.

Meme trends and meme tokens among leading crypto narratives | Source: CoinGecko

The report highlights that almost a third of crypto narratives this year have focused on speculative gains from meme coins. Investors placed less emphasis on fundamentals and directed their attention and capital toward dog- and cat-related meme coins, pop culture references, and internet personality-themed meme tokens.

Meme coins have achieved a 6% annual increase in interest from crypto market participants. As Bitcoin garners institutional interest and capital allocation following the approval of Spot BTC ETFs in the US, four meme coin-based trends have emerged among the top 20 narratives in crypto.

Solana (SOL), Base, AI, and cat-themed meme coins garnered between 14% and 8% interest among crypto narratives.

As meme coins cement their place as the trending token category and trend this cycle, catalysts such as institutional allocation and ETF approval could pave the way for further gains for their holders.

Base, Solana and XRP memes outperform premium memes in speculative gains

In the first week of December, XRP-based meme coins turned profitable for their holders as interest and demand for the XRP Ledger and its native token XRP increased. Similarly, Solana and Base-based meme coins dominated the popularity of blue chip meme coins, ranking among the top 20 cryptocurrency narratives of the year.

Dogecoin, SHIB, and PEPE are generally considered top-notch memes, with market capitalizations ranging from $7 billion to $46 billion, as seen on CoinGecko. The top 3 tokens in the meme coin category observed an increase in active addresses and investor activity in the first two weeks of December.

Top 100 meme coins | Source: CoinGecko

According to CoinGecko data, the top 3 tokens have lost double-digit values ​​in the last seven days. Apart from Pudgy Penguins (PENGU), several other meme tokens suffered double-digit losses.

Institutional meme coin assets have tripled this year

The wave of meme coin adoption has led institutions to increase their presence in this category. From February to March 2024, institutional investors’ spot mecoin holdings increased from $62.5 million to $204.8 million.

According to Bybit’s report on institutional investment in memecoins, this represents a significant increase of 226% in interest in the memecoin market.

Bybit report quotes Bybit Institutions President Eugene Cheung as saying:

“Our ‘Beyond the Hype’ report shows that institutional and individual investors are actively taking advantage of the opportunities presented by the memecoin market. The strategic agility of institutions and the dynamic management of retail investors reflect a sophisticated interaction with these assets. “We encourage everyone to review the full report to better understand these important dynamics.”

Is a Dogecoin ETF likely in 2025?

The increased institutional adoption has raised questions about the possibility of gaining approval for meme coin ETFs from the U.S. financial regulator, the Securities and Exchange Commission. ETFStore President Nate Geraci expressed shock that an issuer has yet to file for a Dogecoin ETF inside and outside the US

Geraci believes that the only possible disadvantage of such an application would be that it would indicate a futile endeavor and end up as a marketing expense for the issuer. ETFStore President commented on the “DOGE” mark because it is the mark of the largest meme coin and will likely have the highest relevance and demand among issuers in the future.

It’s surprising that an ETF issuer hasn’t applied for a Dogecoin ETF yet…

What is the disadvantage?

In the worst case, this is a marketing expense.

I’m wondering which issuer is included in the “DOGE” label.

— Nate Geraci (@NateGeraci) December 23, 2024

While the SEC greenlighted a Bitcoin-Ethereum hybrid ETF, DOGE investors hope for Dogecoin ETF approval in 2025.

The gap between Bitcoin and meme coin deepens

YouHodler market chief Ruslan Lienkha told Crypto.news in an exclusive interview:

“Dogecoin’s recent performance appears to be primarily speculative due to its association with Elon Musk rather than any underlying fundamentals, as it still lacks significant use cases in the real world. But a potential benefit may emerge in the future.”

Lienkha comments on what differentiates Dogecoin and similar meme coins from Bitcoin. While Bitcoin has been recognized as “digital gold” and provides protection against fiat currency devaluation, Dogecoin and its peers are considered speculative tokens.

The gap between Bitcoin and meme coin is widening and could impact approval of the meme coin ETF, further investment from institutional investors, and retail participation in the category in the second leg of the bull market.

Typically, a decline in Bitcoin would lead to a steeper, market-wide correction, erasing meme coins’ recent gains and negatively impacting the category’s market cap. The correlation with Bitcoin could continue to push meme coins lower, and in any case, the top crypto crashes or reacts to a market-moving event during this cycle.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.