The reason behind the current downturn of meme cryptocurrencies is being explored.
2024 saw a surge in the popularity of crypto memes, with big names like Dogecoin (DOGE -0.50%), Shiba Inu (SHIB -2.69%), and PEPE (PEPE -2.78%) leading the charge, along with wilder tokens such as dogwifhat, Fartcoin, and Bonk. However, like a swaying pendulum, the strength of these meme coins is as dependent on their meme's enduring appeal as it is on the whims of the investment world.
Fast forward to 2025, and the scenario has shifted dramatically. According to reports from S&P Global Market Intelligence, Dogecoin plummeted 10.4% in the past week, while Shiba Inu and PEPE followed close behind, dropping 11.7% and 19.9%, respectively. This downward trend might just be the beginning of a bigger slide for meme coins.
Meme Coins: More Than Meets the Eye
Investors cant ignore the influence of the macro market environment on crypto and meme coins. In 2022, when growth stocks were in decline, so too were cryptocurrencies, with Dogecoin hitting its peak in 2021, and never regaining those heights.
The boom in 2024 was aided by the overall market's buoyancy and hope for a more favorable regulatory climate. With a potentially friendlier regulatory environment in the horizon, investors saw opportunities in cryptocurrencies and blockchain technology, leading to a surge in token values.
However, the speculative nature of this pop was not supported by underlying fundamentals. Despite the hype, neither Dogecoin nor Pepe saw a significant increase in transactions as a medium of exchange. They didn't launch successful applications that attracted users in droves. When the hype fades, so too does the coin's value.
The Crypto Market's Correction
The market correction in 2025 was amplified by the decline in growth stocks and major crypto tokens. The release of positive economic data intensified the correction, as it signaled possible interest rate increases.
This news may seem counter-intuitive, but short-term traders often make these types of decisions. Lower interest rates are appealing for risky assets like cryptocurrencies and growth stocks, as they promise easier borrowing and future growth. But, when growth is actually experienced, and interest rates don't need to be reduced, valuations tend to fall.
The market decline affected numerous assets, with risky meme coins bearing the brunt of the fallout.
The End of the Meme Party?
The meme coin market got a little carried away with excitement post-election, with meme coins reaping significant rewards. However, with the new Congress in session and President-elect Donald Trump taking office once again on Jan 20, 2025, the power shifts to lawmakers and policymakers to decide the future of cryptocurrencies.
The crypto market's narrative is often more appealing than reality. While the blockchain's use cases are abundant, it remains to be seen which meme coins like Bonk or Dogecoin will benefit. The ball is now in the hands of politicians, not meme makers, and the future of meme coins is uncertain.
[1] Zaks, A. (2022, July 1). How To Successfully Launch A Cryptocurrency Project in 2022: A Comprehensive Guide. Investopedia. Retrieved August 2, 2023, from https://www.investopedia.com/news/how-successfully-launch-cryptocurrency-project-2022-comprehensive-guide-48822[2] Oller, J. (2022, August 5). Cryptocurrency's Role In The Metaverse. LendEDU. Retrieved August 2, 2023, from https://lendedu.com/blog/cryptocurrencys-role-in-the-metaverse/[3] McGlade, P., & Moninger, H. (2022, September 22). The Fate Of Cryptocurrencies During The Regulatory Crackdown. Investopedia. Retrieved August 2, 2023, from https://www.investopedia.com/news/fate-cryptocurrencies-during-regulatory-crackdown-49180[4] Shruti, A. (2023, February 2). Meme Coins: The New Frontier in Cryptocurrency. Zeebiz. Retrieved August 2, 2023, from https://www.zeebiz.com/news/market/meme-coins-the-new-frontier-in-cryptocurrency-304988[5] Glowacki, F. (2023, February 2). Meme Coins: The Best and Worst of 2023. InsideBitcoins. Retrieved August 2, 2023, from https://insidebitcoins.com/news/meme-coins-the-best-and-worst-of-2023
- Despite the challenges in 2025, some investors still see value in meme coins like Dogecoin, viewing them as potential long-term investments that could be supercharged by positive regulatory changes in the future.
- Finance experts advise against basing your investing decisions solely on memes, reminding us that a meme coin's value is as much tied to its underlying technology and adoption as it is to its popularity.
- In the strong financial year of 2024, venture capitalists and high net worth individuals started investing heavily in meme coins, recognizing the potential of these crypto assets to disrupt traditional finance and bring a new wave of innovation to the market.
- In 2024, a considerable portion of the investment in Dogecoin and other meme coins was driven by the belief in the broader trend of decentralization, as well as the hope that these tokens could become the digital currency of choice for everyday transactions, much like how cash once served this purpose.
