Glassnode Analyst Reveals How Memecoins Are Derailing Altcoin Season

• Bitcoin’s dominance at 57.4% is delaying the start of the altcoin season.
• Investment is flowing into memecoins like Dogecoin and PEPE, drawing funds away from traditional cryptocurrencies.

Bitcoin’s price remains steady at around $60,000, with its dominance in the cryptocurrency market reaching 57.4%. This growing dominance is impacting the anticipated rise of the altcoin season. Glassnode lead analyst James Check attributes the delay to the surge of memecoins, labeling them the “silent killer” of the altcoin market.

During a recent podcast on the Rough Consensus, James Check pointed out that the investments are now directed towards memecoins such as Dogecoin, Shiba Inu, and PEPE. This trend is diverting a significant amount of capital from more recognized assets, such as Ethereum, Solana, and Ripple’s XRP. Check estimated that 50-60 cents of every dollar that has been invested in memecoins could have been invested in traditional cryptocurrencies. 

This is because the money that is being pumped into memecoins does not leave much room for other altcoins’ investment. With capital flowing into these new and popular assets, the existing cryptocurrencies will have fewer investment opportunities. 

PEPE Token Continues Upward Trend in Early 2024

While in the 2021 bull run, the memecoins started picking up towards the end of the market cycle, the current trends show that they are being embraced at the beginning. With the memecoins gaining popularity, traders are now putting in a lot of money to try and make profits from these coins.

Another example is the PEPE token which has been on an upward trend in the first half of the year 2024. On May 15, the trader generated $46 million from the initial investment of $3,000, hence recording a return of 15,718 times. However, Check pointed out that there was low trading volume in the other parts of the market, with many traders only trading memecoins such as PEPE.  

Check noted that the trend picked up after the approval of spot Bitcoin exchange-traded funds (ETFs) on January 10, with traders using the Bitcoin price rally as a chance to invest in risky memecoins. 

Despite the soaring prices of memecoins such as PEPE and Dogwifhat (WIF), Check observed a period where market activity was notably sparse, suggesting that traders avoided or neglected other potential investment opportunities.

Analysts View Altcoin Decline as Bullish Signal

On the other hand, some traders and analysts consider the current altcoin price decline and low trading volumes as bullish signals. Luke Martin, a crypto trader said that the present situation of the altcoins is a perfect time to buy. Martin said that such a situation was last seen in Bitcoin in the summer of 2020 when a similar plunge happened before a powerful rebound. 

Altcoins currently at the “sell your house to buy more” level.

Last time $BTC was at this level was exactly 4 years ago in the summer of 2020 when price went vertical from 10k to 60k over the next 6 months.

h/t @CryptoKoryo pic.twitter.com/vwaGkGE1FA

— Luke Martin (@VentureCoinist) August 27, 2024

According to Martin, altcoins are at a crossroads at the moment and buying at these levels could result in huge returns soon. He noted that Bitcoin rose from $10,000 to $60,000 within six months after experiencing low trading volumes for a similar duration. 

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