In recent weeks, the memecoin sector has confirmed its dominant market position, while Layer 1 platforms are experiencing challenges. This analysis is based on Velo data.
Analysis Based on Velo Data
The memecoin sector exploded with a gain of more than 10.097%, while Layer 1 platforms saw a modest increase of about 7%. The DeFi, L2, Gaming, and AI sectors experienced growth between 5% and 8%, but did not match the success of other categories. High volatility in the memecoin market suggests further price increases for BONK, PEPE, and SHIB tokens, although market sentiment must remain speculative. Emphasizing fundamentals could lead to a market recovery for L1s, while memecoin values might drop by 5% to 10% as investors seek more useful digital assets.
Role of Hyperliquid Whales in the Memecoin Market
Amid the memecoin hype, a Hyperliquid whale made a $3.46 million long position trade with 50x leverage in MELANIA, involving 4.61 million tokens. The purchase of MELANIA tokens by the high-functioning Hyperliquid address '0xf3f4…057c' demonstrates a trading pattern similar to DOGE and SHIB. However, the success of this rally depends on more than just leveraged bets since a lack of transparency in the market could lead to failure.
The Future of the Memecoin Sector After Long Decline
This raises the question of whether these actions can lead to a resurgence in interest in memecoins, as their market cap stands at levels observed during Q3 2024. Although the number of short-term traders who serve as retail investors continues to decrease, future capital inflows could persist due to price increases. An increase in memecoin market activity would indicate better utility and community involvement, essential for maintaining market momentum. Market success will depend on the return of retail users and sustained high network usage.
The memecoin sector can maintain its dominance over Layer 1 platforms if retail users return and network usage remains elevated.
