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The recent downturn in the memecoin market highlights a significant shift as these cryptocurrencies face unprecedented losses amid broader market volatility.
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Factors contributing to this decline include a soaring trading volume coupled with a notable drop in open interest, indicating an overall bearish sentiment among investors.
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“We’re witnessing the biggest long liquidation of this bull cycle,” CoinGlass emphasized, indicating the magnitude of recent market movements.
Memecoins experience a substantial decline as trading volumes surge and open interest plummets, culminating in the largest liquidation event since 2021.
Memecoin Market Capitalization Takes a Hit
The latest downturn in memecoin prices has seen the total market capitalization of the sector shrink to reach a three-week low of $119.6 billion as of December 10. This sharp decline emphasizes a **21% drop** over a mere 24-hour period, marking a significant reduction from previous highs.
Interestingly, the last time a similar market cap was reported was on November 27, when it stood at approximately $118 billion. The **daily trading volume** across the memecoin sector has nearly doubled during this period, further illustrating the intensity of selling pressure. Memecoins have quickly shifted from symbolizing speculation to being indicative of prevailing market sentiments.
As the largest memecoin by market capitalization, Dogecoin (DOGE) led the declines, dropping **5.6%** over the last day, while its rival, Shiba Inu (SHIB), reported even steeper losses at **10.4%**. In contrast, the Ethereum-based Pepe (PEPE) emerged as the sole memecoin to post gains, climbing by **1.7%**, capturing attention amidst a tumultuous atmosphere.
Open Interest Plummets in Memecoin Sector
The drop in memecoins was preceded by a decrease in open interest (OI), with **Pnut (PNUT)** showing the most substantial retreat, witnessing a **30% decline** in OI within 24 hours. Open interest signifies the total number of derivative contracts that have not yet been settled, indicating the level of market activity and sentiment.
According to data, Dogecoin’s open interest fell over **20%** on the day to approximately **$3.1 billion**, showcasing a stark contrast to WIF’s **$519 million** in OI, which had decreased by **27%** during the same timeframe. Meanwhile, Pepe’s OI stands at **$302.4 million**, down roughly **11%**.
This decrease in open interest among memecoins suggests a prevailing **bearish momentum** in the market as leveraged traders close contracts in anticipation of further price reductions. As the market shifts, understanding these indicators becomes crucial for investors looking to navigate market turbulence.
Massive Crypto Liquidations Accompany Memecoin Decline
The ongoing drawdown in the crypto market has precipitated over **$1.7 billion** in liquidations of leveraged positions in the last 24 hours. Notably, more than **$1.3 billion** of this amount was wiped out within a mere **12-hour** span, underscoring the severe impact of market shift.
CoinGlass commented, “This represents the biggest long liquidation of this bull cycle so far,” capturing the scope of the recent market turmoil. Data reveals that futures contracts related to smaller altcoins and memecoins suffered more substantial losses than those linked to Bitcoin or Ethereum, a pattern not commonly observed.
Among the liquidated positions, **$72.6 million** in DOGE longs and over **$22.35 million** in SHIB longs constituted the primary losses in the memecoin sector within the past half-day. Moreover, approximately **$7.9 million** in PEPE longs and **$3.6 million** in WIF longs were also liquidated, contributing to the rising skepticism in the market.
Notably, this event marks the most significant liquidation wave since 2021, a period associated with the commencement of the bear market cycle. Revisiting recent patterns, a similar wave was experienced after the **December 5 flash crash**, which resulted in over **$816 million** in longs being liquidated, further intensifying the subsequent sell-off.
As Bitcoin’s price fell sharply, dipping as much as **11%** to $92,000, memecoins also felt the impact, with DOGE plunging **12%**. This highlighted the interconnectedness of market assets and the potential cascading effects that can occur across sectors.
Conclusion
The significant losses experienced in the memecoin sector underscore the volatile nature of cryptocurrency investments. As trading volumes surge and open interest drops, investors must remain vigilant as bearish pressures continue to shape the market. With over **$1.7 billion** in liquidations seen, the landscape poses both challenges and opportunities for seasoned traders and newcomers alike.
