Are memecoins dead after their market cap crashed hard since surpassing 2021 highs in late 2024?
SPX6900 crashed by more than 10% in the last 24 hours, underperforming the entire memecoin market, which lost 6.8%. Other popular memes with similar losses were Pump.fun [PUMP] and Useless Coin [USELESS]
Can SPX6900 [SPX] reverse this capital loss, as its activity seems to be shifting differently?
SPX crashes, but interest rises
SPX6900 was trading in a bear market structure.
The memecoin was heading south at the time of writing, approaching a zone that resulted in a short rally. This price level at $0.44 also coincided with the low on the 10th of October.
While the price action was falling, sellers were losing momentum, as seen in the MACD. The signal line was also starting to turn to the upside, indicating seller exhaustion.
Open Interest (OI) rose from $8 million to $11.47 million, matching the fading seller momentum. The contrast in price direction and OI indicated divergence, usually a bullish reversal pattern.
Moreover, the price was trading around a previous bounce zone.
Source: TradingView
Losing the $0.44 zone would accelerate the drop, but holding above it could lead to a bounce back to at least $0.75. This level was previously a resistance point, and it has triggered selling action three times.
Given the current price movement, what does the behavior of market participants indicate?
Mixed sentiment from on-chain data
Looking at the weekly trading data for the memecoin, buyers emerged as the dominant force, despite the SPX6900 price being bearish.
Since the start of December, both the Spot and Futures Taker CVD have stayed green. However, the bars showed that their buying power was slowly declining but was still present.
Source: CryptoQuant
However, the data from CryptoQuant suggested that retail traders did not share this positive sentiment. Their activity stayed neutral, emulating their usual behavior of involving themselves at market peaks.
In fact, CZ called out traders who were fading these moments when most cryptos are cheap.
But will SPX bounce alone, as the broader sector is struggling?
Will SPX bounce amid a behavior shift?
As per reports, the memecoin sector lost most of its dominance since mid-Q3. CoinGecko wrote,
As SPX shows potential hints of a bounce, the broader sector could hold it back.
Even Dogecoin [DOGE] was struggling as its market share was falling due to the memecoin market being flooded. That meant there was a scramble for liquidity.
Final thoughts
- SPX led the entire memecoin sector, but the price was hinting at a short-term bullish reversal.
- The sluggishness in the memecoin market, which fell from $150B to $43B, could hinder the SPX reversal.
Source: https://ambcrypto.com/examining-spx6900s-setup-as-memecoin-sentiment-shifts/
