Meme coin prices experienced a significant decline on Thursday, wiping out most of the gains accrued during the festive Santa Claus rally on Christmas Eve.
Fartcoin (FARTCOIN), a leading meme coin in the Solana ecosystem, plummeted by 16.8%, marking it as one of the largest losers in the market.
Floki (FLOKI) saw a retreat of 4.5%, while Shiba Inu (SHIB) fell by 6.5%. Other notable laggards included Brett, Mog Coin, and Popcat (POPCAT).
In contrast, PENGU was the sole major meme coin to post gains, rising by 6% as total sales surged by 127% in the last 24 hours to reach $6.1 million.
The decline in meme coin prices can be attributed to a prevailing risk-off sentiment in the crypto market, as most cryptocurrencies recorded losses. Bitcoin fell to $95,000, and the overall market capitalization dropped to $3.32 trillion. Highly volatile altcoins, particularly meme coins, tend to experience sharp declines when Bitcoin struggles.
The dip in meme coins and other altcoins is also linked to reduced liquidity in the crypto market due to the Christmas holiday. Data indicates that many cryptocurrencies are facing low trading volumes, as most investors remain on holiday. Bitcoin’s 24-hour trading volume on Thursday was $33.96 million, the lowest since November 3rd.
Other meme coins also reported diminished trading volumes. Floki’s 24-hour volume was $238 million, the lowest in over a month, while Fartcoin’s volume stood at $187 million, and Shiba Inu reported $576 million. Cryptocurrency prices are known to exhibit significant volatility when trading volumes are limited.
The downturn in meme coin prices is also influenced by profit-taking by investors following their sharp increases throughout the year. Floki peaked at $0.0002885 in November, a 200% rise from its August low, while Shiba Inu reached $0.000033.
Moreover, concerns regarding the Federal Reserve’s monetary policy persist, as indications suggest only two interest rate cuts may occur in 2025. This hawkish stance has resulted in a rise in bond yields, with the 10-year yield moving to 4.63%, while the 30-year and 5-year yields increased to 4.8% and 4.50%, respectively. Rising bond yields often pressure cryptocurrency and stock prices.
