Top 3 meme coins: Dogecoin, Shiba Inu and PEPE look set for further declines amid lower investor interest
|- Dogecoin, Shiba Inu and PEPE decline on Tuesday after gaining on Monday.
- The number of active addresses in DOGE has dropped sharply from its October 10 peak, while it edges up for SHIB and PEPE.
- The MVRV ratio shows that the top 3 meme coins are overvalued in the 30-day time frame.
Dogecoin (DOGE), Shiba Inu (SHIB) and Pepe (PEPE) all decline on Tuesday, partly erasing the gains registered on Monday. On-chain data from crypto intelligence platform Santiment suggest that a further price correction may be on the cards as the number of active addresses remains low – falling sharply from recent highs in DOGE’s case – and the MVRV ratio (market value to realized value) signals that the three meme coins are overvalued.
On-chain metrics suggest meme coins could extend decline
Active addresses is an on-chain metric that identifies the activity of wallets holding a token. It helps identify changes in demand and relevance of a coin among market participants.
Dogecoin’s active addresses hit a six-month high of 133,880 on October 10. Since then, the metric has fallen sharply, according to data from Santiment.
Dogecoin price has not yet caught up with the decline in active addresses. While the meme coin lost 1.7% on October 10, it has risen around 10% since then and it is broadly consolidating on Tuesday at $0.1166.
In the case of Shiba Inu and Pepe, active addresses dropped on October 13 and recovered slightly since then. However, SHIB and PEPE’s active addresses remain below their six-month average.
Active addresses in DOGE, SHIB and PEPE. Source: Santiment.
The Market Value to Realized Value (MVRV) metric is used to identify whether a token is undervalued or overvalued in a given time frame. The 30-day MVRV for DOGE, SHIB and PEPE shows positive values at 4.93%, 9.47% and 13.52%, respectively. This means that the three meme coins are currently overvalued. PEPE is currently the most overvalued meme coin in the top three.
These positive MVRV values could be interpreted as a sell signal, likely to increase selling pressure on the tokens across crypto exchange platforms. In previous instances when MVRV spikes, a correction ensues.
MVRV Ratio 30-day for DOGE, SHIB and PEPE. Source: Santiment.
The transaction volume for the three meme coins has hit its lowest level in the last 15 days, as seen on Santiment. Dropping transaction volume is typically considered a sign of traders losing interest in a coin.
Transaction volume DOGE, SHIB and PEPE. Source: Santiment.
Dogecoin trades at $0.1163 (-0.33% on the day), Shiba Inu at $0.000018 (-1.87%) and PEPE at $0.000010 (-2.57%) at the time of writing on Tuesday.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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