Memecoins, known for volatile trading patterns, surged in popularity as top performers in the 2024 crypto market. Nonetheless, the recent market downturn has eroded their early-year gains, raising alarms about potential further depreciation, causing investor unease.
Pepe and Dogwifhat Face Potential Downturns
The cryptocurrency market faced a severe setback between March 18 and March 19, with a staggering $230 billion withdrawn in a day, challenging the ongoing enthusiasm for memecoins. Analysts caution against investing in altcoins Pepe (PEPE) and Dogwifhat (WIF) in the near future due to their risky trends and deteriorating performance.
After a monumental 500% increase in the last month, PEPE’s growth stalled, with the Relative Strength Index (RSI) descending to 55, indicating possible bearish tendencies ahead. PEPE, primarily based on speculative trading without solid use cases, risks a steep drop in value.
Dogwifhat’s token WIF also rocketed by approximately 600% recently, garnering attention on the Solana Blockchain. Yet, the potential for investors to secure profits could trigger a drastic downfall in value. With WIF’s critical support levels under scrutiny, failure to hold could lead to an 86% plunge.
Investors Beware of Speculative Appeal
The charm of memecoins hinges on their speculative nature, enticing buyers with the prospect of selling at higher rates to the next investor, an approach rooted in the greater fool theory. This strategy, while profitable in bullish markets, poses high risks during shifts in market sentiment.
Though endorsements from public figures could temporarily boost memecoin values, traders should proceed with caution, particularly during turbulent market phases. Steering clear of volatile assets like PEPE and WIF may help in mitigating potential financial setbacks.