Meme coins have dominated crypto chatter since NFTs took center stage during the pandemic. A recent CoinGecko report reveals they're no joke. Meme coins, real-world assets, and AI accounted for 36% of crypto narrative market share in Q2. But soon that might all be in the past.
Meme coins alone made up four of the 15 most popular crypto narratives. They drove spot trading volume on decentralized exchanges (DEXs) up 16% quarter-on-quarter. The top 10 DEXs traded $371 billion in crypto between April and June. Solana DEXs, the meme coin hotspot, saw the biggest jump.
Centralized exchanges (CEXs) didn't fare as well. Spot trading volume on leading CEXs fell 12% to $3.4 trillion. Regulatory heat and underperforming VC-backed tokens were to blame. Binance took a hit, but Bybit climbed to second place. It nabbed nearly 13% of total trading volume in Q2.
But the meme coin party might be winding down. Analysts point to shifting investor sentiment and market conditions. CoinMarketCap reports meme coin traffic dropped from 23% of total web traffic in Q2 to 15% in early July.
Ryan Lee, chief analyst at Bitget Research, told Cryptonews: "Investors may shift towards projects with stronger fundamentals, especially in an economically uncertain market environment." He added, "As the crypto market matures, people increasingly prefer projects with clear use cases, utility, and strong development teams."
Meme coins thrive on viral marketing and social media hype. But this can lead to market saturation. It's tough for new meme coins to stand out. In Q2, Solana and Coinbase's Base blockchain saw the most popular launches. Over 1.2 million tokens were released on Solana's Pump.fun, generating $48 million in revenue.
By July 30, Pump.fun had raked in more than 506,000 SOL, worth around $93 million. Cat-themed coins like Shark Cat were all the rage. Celebrity-backed tokens also made waves. These included Caitlyn Jenner's JENNER, rapper Iggy Azalea's MOTHER, and Andrew Tate's DADDY.
Meme coins' reliance on social media trends is their Achilles' heel. Many crash and burn once the hype dies down. Take BALD, for example. This Base token mocking Coinbase CEO Brian Armstrong soared 3,000% before crashing to zero a day later. The devs vanished with $26 million in liquidity.
That's just one of the risks in the meme coin game. Most are purely speculative. Only a handful, like DOGE, Pepe, Floki, and Shiba Inu, have hit $1 billion market caps. The rest? They're struggling to keep their heads above water.
Lee predicts tough times ahead for meme coins in Q3. "The trend of declining popularity for meme coins may continue, particularly if broader market conditions remain uncertain or bearish," he noted. He added, "It could result in decreased trading volumes and stagnant prices for many meme coins."
But it's not all doom and gloom. Celebrity endorsements could breathe new life into meme coins. Case in point: Solana's Water token. It shot up 350% after football star Lionel Messi's Instagram post. But even Messi's magic couldn't save it from a 95% plunge since its June 26 high.
The recent Bitcoin halving might also give meme coins a boost. As traders look beyond Bitcoin, meme coins could capture speculative interest. But without real utility, even star power might not be enough to keep these tokens afloat.