Meme Coin Market Sees Shifts as SEC Weighs In and Volume Dips

This week has been one of considerable volatility in the world of meme coins. Some have continued making headlines, and others, well, not so much, and certainly not with dollar signs attached.

Trading on these fun—and sometimes just plain silly—assets has been a bit of a mixed bag this week, leaving the meme coin market cap at approximately $55.43 billion. This is down from the $59.85 billion we reported last week, and a far cry from the $73.82 billion high watermark the meme coin market cap hit earlier this month.

SEC’s Stance on Meme Coins Marks a Major Shift

This week brought some long-needed clarity to the meme coin space, with the SEC’s Division of Corporation Finance now ruling that memes are collectibles, not securities. The ruling is part of a broader staff interpretation and is a major shift from the aggressive regulatory stance taken by SEC Chair Gary Gensler. Under the new framework, meme coins like Dogecoin and others do not have to pass the Howey test to not be considered securities. This decision is a relief for the meme coin market, with investors and creators of these coins not having to look over their shoulders for potential SEC scrutiny.

Despite the presence of this uncertainty, the market seems to have reacted positively. After the recent SEC interpretive guidance, which lays out for the first time how the securities regulator distinguishes between securities and non-securities, the immediate price response across many top meme coins has been to the upside, with several of them showing correlated price movement into this recent rally.

Market Performance: Winners and Losers

The market dynamics for this week have had some interesting developments. In the meme coin sector, a volatility respite seems to have been granted this week to the overall dip in the market cap. From the dip, SNEK has emerged as a top gainer, with an impressive 29% surge to comfortably come in at the number one position this week across all coins, not just top gainers. Following SNEK are two other meme coins that have enjoyed even just a touch of green, with BRETT coming in second with a nearly 10% gain. Not to be left out, DOGE also seemed to enjoy the week, gaining just over 1%.

Meanwhile, many meme coins face an equally steep loss. PENGU, SPX, and AI16Z rank among the biggest losers of this sector, with all three sinking between 18% and 22% over the last week. But why take such a risk? Why invest in a sector as obviously stupid as this? Well, memes are obviously very popular right now. In an economy that is as upside-down as ours, you can imagine that us mere mortals are really grasping for straws and are very insecure about what’s coming next.

Pump(.)fun: A Platform in Decline?

Although some meme coins are still on the rise, the overall meme coin ecosystem isn’t thriving in all its sectors. A story that illustrates this well was shared this week by an article in The Block. The article noted that Pump(.)fun, once a leading platform for trading meme coins, has seen its trading volume plummet by a staggering 63%. It dropped from $119 billion to just $44 billion in the span of a month (from mid-October to mid-November). We have concerns about the future of this platform. It was riding very high just a few months ago.

Another platform problem is a severe reduction in the number of daily meme coin launches. Pump(.)fun had been counting an average of 58,000 new launches every day, but this number has now shrunk down to just 24,000. This halving could reflect a waning interest from both meme coin developers and the investors who trade them, as the initial warm fuzzies for creating and trading these absolutely ridiculous cryptocurrencies seem to be cooling.

The platform has a halved graduation rate that is now just 0.83%, which means a lot more tokens are being dumped and not serious investors are getting involved. The graduation rate tracks the percentage of tokens that move from the meme coin phase into broader market adoption. So, the path ahead for Pump(.)fun seems really uncertain.

The platform plans to counter these troubles with the following: a mobile app, an Automated Market Maker (AMM), and a likely pivot to a more sustainable user base, stemming from an expanded offering that goes beyond the hype that propelled it to our attention in the first place.

Looking Ahead: Can Meme Coins Sustain Their Popularity?

The SEC’s ruling has given the crypto market some clarity, yet meme coins seem far from disappearing anytime soon. The market is dynamic, and it includes a segment that appears to be quite sustainable. While the broader crypto market presides over a fate that is only getting worse at the moment, meme coins still have at least a glimmer of an existence that could last for a while, with some even predicting that the hype could return.

We have yet to determine how these changes will affect things over the next few weeks. They could still experience growth if traders and developers continue to back them. But unless they can come up with something that meets the clear and long-term definition of a “value proposition,” they might not hold our interest for much longer. Even if that were to happen, they’d still be a speculative investment. As for what they are right now, meme coins are a part of the market that’s just as alive and kicking as everything else, and no less investor-friendly.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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