• Tue. Jun 25th, 2024

Memecoins Trading Surge as Traders Anticipate Spot Ether ETF Approval

Steve Kornacki

BySteve Kornacki

May 21, 2024
Memecoins Trading Surge as Traders Anticipate Spot Ether ETF Approval

Bloomberg Analyst’s Odds of Spot Ether ETF Approval

In a notable market shift, meme coins such as MOG and PEPE have experienced significant price surges as traders anticipate the US SEC’s approval of spot Ether (ETH) exchange-traded funds (ETFs). Their actions follow a bullish update from Bloomberg analysts regarding the proposals for spot ETH ETFs.

Bloomberg analysts Eric Balchunas and James Seyffart raised the likelihood of U.S. approval for spot ether ETFs from a previous 20% to 75%. This adjustment in odds has invigorated market sentiments, leading to a substantial uptick in the prices of various Ethereum-based tokens.

The announcement catalyzed market-wide price jumps, with Ether’s price rising over 17% in one day. Bitcoin, the leading cryptocurrency by market capitalization, also benefited, retaking the $71,000 mark for the first time since early April.

Among the standout performers were meme coins issued on the Ethereum network. The price of the cat-themed MOG token, inspired by a popular TikTok meme, surged nearly 50%.

Meanwhile, the frog-themed PEPE token achieved more than a 20% increase. Even though both tokens were launched in 2023, they have become significant players within the memecoin sector, alongside more established tokens like Dogecoin (DOGE) and Shiba Inu (SHIB).

In addition to memecoins, utility tokens within the Ethereum ecosystem recorded decent gains. Lido’s native token (LDO) rose by 15%. Similarly, ARB, the token for Ethereum’s layer-2 solution Arbitrum, jumped by 18%. Even the stalwart meme tokens DOGE and SHIB saw modest increases, each adding 6% to their value.

Memecoins as High Beta Investments

The surge in meme coin prices reflects their increasing role as high-beta investments linked to the performance of their underlying blockchain networks. High-beta investments typically exhibit greater volatility than the market at large, often amplifying gains and losses. 

Memecoins, with their cultural and viral appeal, have come to epitomize this high-beta behavior. According to Viro, a core team member of MOG, established meme-themed projects typically exhibit high volatility with their native token, particularly on the blockchain on which they are built. 

MOG has proven itself to be a successful meme on the Ethereum network, even though its current market capitalization is significantly lower than that of its closest competitor, PEPE. This suggests potential for growth and further establishment in the market.

Viro remarked that MOG has the potential to catch up to PEPE, suggesting that market dynamics favor further outperformance by MOG due to its relatively lower market cap and higher speculative appeal.

Broader Implications for the Crypto Market

This trend of memecoins serving as proxies for broader network growth is not limited to Ethereum. From December to March, Solana-based meme coins experienced similar surges as the network’s SOL token recorded substantial gains.

During the same period, the Avalanche Foundation, which oversees the Avalanche blockchain, announced investments in meme tokens built on their network. This move was part of a strategy to harness the cultural and viral value these tokens generate among online communities and investors.

Steve Kornacki

Steve Kornacki

Steve Kornacki, a respected author at Big Trends Signals, uses his deep online trading acumen to create comprehensive guides and balanced reviews, empowering traders in their digital pursuits.

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