The memecoin fever is 'disrupting' the Bitcoin halving cycle

On April 1, Chainlink community liaison Zach Rynes (aka ChainLinkGod) said 'this bull market is weird' in a post on X.

Historically, bull runs would see liquidity flow into Bitcoin before moving to ETH, other high-cap coins, and eventually low-cap coins.

However, the market 'skipped some steps that we have seen in previous cycles', as the flow from BTC went straight to memecoins, which is 'a bit unusual', Rynes commented.

The total capitalization of memecoins increased to $70 billion on April 1, mainly driven by newly launched token pumps such as Dogwifhat (WIF), Book of Meme (BOME) on Solana, and older memecoins such as Pepe, Bonk (BONK).

The recently launched Base native DEGEN token is one example, skyrocketing 2,800% in the past month. This memecoin is an unofficial token distributed to the community on the decentralized social network Farcaster.

Rynes added that market fundamentals don't play much of a role right now:

'There is some retail investor money coming in, but not at the levels seen previously. We're in an attention economy that's based on specific stories, not real fundamentals.'

This point was also voiced by Ethereum educator Anthony Sassano on April 1, saying that after about a decade in the cryptocurrency space, 'I can say with complete confidence that this is a strange bull market. the best ever'.

Retail, he added, is not here 'in any meaningful way' until the entire market goes up:

'These industry-specific pumps are clearly not driven by crypto-native projects but are related to short-term profit-seeking cash flows.'

Another factor adding to the strangeness of the current market cycle is Bitcoin hitting its all-time high (ATH) ahead of the halving. In previous cycles, Bitcoin ATH came the year after the event.

This asset reached 73,734 USD on March 14 and the BTC halving is only 18 days away on April 20. Analysts predict the pre-halving retracement is over.

On April 1, technical analyst Moustache noted that BTC had regained a key Fibonacci ratio level seen in previous cycles, but this time before the halving.

'BTC reclaims the Fibonacci Ratio 3 line (4.236) on the monthly chart. In every previous cycle, this move has resulted in a parabolic curve. The structure is always the same, only this time it happens before the halving'.

Lesley Montoya

Update 04 April 2024