As the weaker dollar led to a rebound in liquidity indicators and marginal improvements in inflation data. Despite these positive changes, MEME Coin, once one of the strongest narratives in this bull market, continues to perform poorly and does not seem to show any signs of recovery.
Inflationary pressures cause chain reactions in global markets
The strengthening of the US labor market led to a peak in the altcoin market in early December 2024. In mid-December 2024, BTC entered a consolidation phase after Federal Reserve Chairman Powell said that interest rates may remain unchanged due to inflationary pressures from the Trump administrations tariff policy. Although the Fed expected some inflationary impact from tariffs, Trumps aggressive and rapid tariff implementation exceeded the expectations of most economists, triggering a chain reaction in the stock and crypto markets.
Although this weeks U.S. inflation report was slightly better than expected, it failed to provide much comfort. Continued uncertainty around trade policy still makes the market pessimistic about the possibility of the Federal Reserve taking easing measures in the near term.
MEME Coin is consolidating, and Pump.funs revenue is declining significantly
For MEME Coin, signs of consolidation are very much in the works. Since February, Raydium — a Solana-based automated market maker and liquidity provider for the Serum decentralized exchange — has plunged 71% in price, while Solana itself is down 37%.
Pump.fun is a decentralized exchange (DEX) based on the Solana blockchain that has become a popular platform for traders to quickly launch, discover, and speculate on meme coins. The platform supports the rapid creation and trading of tokens, often leading to extremely volatile market activity. In the past 12 months, the Pump.fun platform has generated more than $582 million in revenue, making it one of the most profitable crypto projects in this cycle. However, its revenue growth has recently declined rapidly.
The altcoin market is weak, and market funds are more cautious
Altcoin weakness in December and the bursting of the MEME Coin bubble in January have combined to reduce the cryptocurrency market cap by $1 trillion — from $3.6 trillion to $2.6 trillion. This redistribution of wealth is likely to make investors cautious about committing further funds, resulting in a limited rebound even if driven by better inflation data. The unwinding of fully realized arbitrage positions by hedge funds has been the main driver of recent selling pressure. Much of this expected sell-off has already been completed and is now likely near its peak intensity.
Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
