The meme coin sector, valued at approximately $53 billion, saw substantial gains on Tuesday, with notable performers like pepe (PEPE) and dogwifhat {{WIF}} surging by 22% and 25%, respectively, according to CoinGecko data.
This rally coincides with bitcoin (BTC) rebounding to a one-month peak of $65,000 before settling at $63,000. The persistent robustness of meme coins suggests traders are redistributing profits from higher market cap assets like BTC and ETH into more speculative investments.
Over the past 24 hours, the CoinDesk 20 Index (CD20), which tracks large-cap tokens, has registered a 2.3% increase.
The emergence of meme coins themed around American politics, following an incident involving presidential candidate Donald Trump, highlights their recent popularity. Coins like America Coin (USA) and Super Trump (STRUMP) have surged by 204% and 43%, respectively, since the incident.
Read more: Meme Coin Liquidity Peaks Amid Persistent Bid-Ask Spread Risks
Historically, meme coins exhibit strong performance during periods of BTC and ETH consolidation near local highs but tend to underperform during broader market declines. For instance, Dogwifhat saw a remarkable 60% rise in May while BTC traded in the $66,000 to $69,000 range. Subsequently, WIF experienced a 60% decline over the following 30 days amid a market downturn that saw BTC drop by 21% over the same period.
BTC currently maintains a market depth – a gauge of liquidity – between $14.8 million and $11.2 million on Binance, representing a slight deviation from current levels. In contrast, WIF’s market depth ranges only between $1.4 million and $1 million, indicating greater susceptibility to price fluctuations triggered by liquidations and market orders compared to larger tokens like BTC and ETH.