Memecoins are experiencing a significant decline in the market, mainly due to the increasing presence of institutional investors in cryptocurrency.
Nate Geraci, founder of the ETF Institute, pointed out that intelligent money from Wall Street has begun to dominate the market, making it challenging for meme-based tokens to survive as they once did. In a recent post on X (formerly Twitter), Geraci highlighted that the influx of Wall Street money had altered the market dynamics, leading to a downturn in the value of memecoins.
Wall Street’s Impact on Memecoins
The downturn in memecoins is evident, with data from CoinMarketCap revealing a 28% drop in the market cap of memecoins over the past 30 days. This sharp decline has affected several major memecoins, resulting in double-digit losses. Geraci attributes this trend to the growing influence of institutional investors, who redirect funds towards more tangible assets rather than speculative tokens like memecoins.
According to Geraci, this shift is beneficial for the long-term health of the crypto market. He described memecoins as “garbage” and emphasized that the arrival of Wall Street money steers investments away from these speculative assets. The move towards more stable investments, such as spot crypto exchange-traded funds (ETFs), is a positive development for the crypto ecosystem. Since their listing, these ETFs have seen substantial inflows, further diverting attention and capital away from memecoins.
Memecoins’ Struggles and Diverging Opinions
Geraci’s perspective on the decline of memecoins is shared by many within the crypto community, who view the collapse as a necessary step towards a more mature market. He believes that the presence of institutional money will make it increasingly difficult for scams and celebrity-endorsed coins to gain traction, leading to a healthier and more sustainable crypto market.
However, not everyone agrees with Geraci’s assessment. Some crypto enthusiasts argue that the decline in memecoins is not directly related to the influx of Wall Street money. One user pointed out that the increase in Bitcoin dominance, fueled by inflows into BTC, occurred months after Bitcoin ETFs launched. They suggested that the memecoin cycle peaked between late March and early April, long after these ETFs began trading.
The Future of Memecoins
Despite the ongoing debate, evidence suggests that memecoins are facing significant challenges. A recent report by Chainplay revealed that 97% of memecoins collapsed in 2024, with an average of 2,000 tokens disappearing monthly. This trend is due mainly to the sheer volume of new tokens created daily. DEX aggregator data indicates that around 50,000 new tokens are generated each day, with numbers sometimes reaching 100,000 during peak periods. The Solana network accounts for most newly issued memecoins, but other networks like Base, Binance Smart Chain (BSC), and Polygon also contribute to the high volume of new token creation.
While some believe that memecoins will continue to have a place in the crypto market, the current decline suggests that the landscape is changing. The influx of institutional money and the focus on more stable investments push speculative assets like memecoins to the sidelines. As the market evolves, the future of memecoins remains to be determined, with many questioning whether they will be able to regain their former popularity.