The volume of futures linked to meme coins experienced a significant surge on Saturday, accompanied by a notable increase in bets against these non-serious tokens resulting in a collective loss of over $50 million within a 24-hour period, indicating a level of speculative fervor.
According to data from Coinglass, short positions on popular meme coins such as dogecoin, shiba inu, pepe, floki, and bonk witnessed liquidations exceeding $50 million in the past day, contributing to a surge in their prices.
Liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to the trader’s failure to maintain the required margin. This can happen when the trader lacks sufficient funds to sustain the position.
Among these tokens, Pepe (PEPE), the frog-themed meme token on Ethereum, soared by up to 100%, reaching record highs. Meanwhile, WIF, the dog-themed token on Solana issued in November, surged by as much as 80%, marking its ascent above the $1 price threshold and establishing itself as one of the initial prominent meme tokens to achieve this milestone.
BREAKING: Robinhood just bought another 230 Billion $SHIB
— Shiba Inu News (@ShibalnuNews) March 2, 2024
They now hold over 36 Trillion $SHIB.
😱😱😱 pic.twitter.com/qqhFSOrnwm
Meme coins gained prominence last week as speculative vehicles for betting on the potential growth of the underlying blockchains they represent. Notably, Ethereum-based tokens such as dogecoin (DOGE), shiba inu (SHIB), pepe (PEPE), and floki (FLOKI) have dominated the meme trading activity on the Ethereum network, while bonk (BONK) and dogwifhat (WIF) have served as proxies on the Solana blockchain.
On Thursday, bullish positions on DOGE reached a historic high, surpassing $1 billion in opened positions. Nearly 70% of these positions were long bets, reflecting confidence in the tokens’ continued growth. Since CoinDesk initially reported on the surge in trading volumes, DOGE prices have surged by over 50%.
Open interest in PEPE, SHIB, BONK, and FLOKI has also experienced significant growth, reaching a combined total of $1.5 billion in recent days, according to Coinglass data. This surge in futures bets suggests an influx of new capital into the market.
In contrast, the CoinDesk 20 Index (CD20), a gauge of the largest and most liquid cryptocurrencies, surged by almost 5%.
While meme tokens are often perceived as lacking intrinsic value, they are rapidly gaining popularity among traders.
Entities like the Avalanche Foundation, a non-profit overseeing the Avalanche blockchain, have begun investing in meme tokens developed on the platform. This move acknowledges the significance of online culture and the memetic value these tokens can generate among investors.
Market observers suggest that meme coins represent a potentially profitable avenue for capitalizing on ecosystem expansion, albeit with inherent risks.
Nick Ruck, COO of ContentFi Labs, shared insights with CoinDesk via Telegram last week, stating, “While meme tokens have been somewhat sidelined, they frequently experience surges in value following rallies in blue-chip cryptocurrencies. Traders often adjust their positions from ETH and BTC to alternative coins during these periods.”