The market’s favorite jokers are in trouble, here’s what’s going on (And how you can stay ahead)
The crypto market is no stranger to surprises, but meme coins have taken unpredictability to a whole new level. From making overnight millionaires to crashing harder than a dropped ice cream cone on a summer day, these coins are once again making headlines, for the wrong reasons.
Meme coins like Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) are currently facing a serious downtrend. Prices are slipping, momentum is fading, and investors are starting to feel the pressure. So, what’s really happening behind the scenes?
Let’s discuss and find out, keep reading!
The rise and charm of beloved meme coins
Meme coins started out as a joke, literally. In 2013, a parody of Bitcoin emerged in the form of Dogecoin. Fast forward a few years, and these “funny coins” have racked up billions of dollars in market cap, gained celebrity endorsements (hello, Elon Musk), and inspired entire communities to rally around them.
Their appeal was simple: low cost, strong community vibes, and the dream of getting rich quick. SHIB called itself the “Dogecoin killer,” and PEPE entered the scene with frog-themed memes that got the internet buzzing.
By mid 2024, meme coins had carved out a solid niche in the market, outperforming many traditional altcoins at times. But the same hype that pushed them up is now dragging them down.
Meme coins are falling, what’s going on?
Over the past few days, meme coins have been hit with back to back losses. Let’s look at what the charts are showing:
- DOGE has dropped nearly 2% and is extending a three day losing streak. It’s currently trading within a symmetrical triangle pattern, a sign of indecision that could break in either direction.
- Since Sunday, SHIB has dropped over 2%, slipping below its 50-day exponential moving average (EMA). The next significant support level lies near $0.00001200.
- PEPE is also sliding, down over 1% and threatening to lose the psychological support of $0.00001000.
The momentum indicators are not giving much hope either. MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) across these charts show neutral or declining signals, hinting at possible continuation of the downtrend.
Now here’s where things get more interesting, and more technical. The root cause behind this meme coin selloff isn’t just price action or fear. It’s also about open interest, a key metric in the derivatives market that many casual traders tend to ignore.
What is open interest
Open Interest (OI) is the total number of active futures and options contracts that haven’t been closed or settled yet. Think of it as a measure of how many people are currently involved in trading a particular asset through these contracts.
For example: Imagine 100 people bet on a cricket match and no one cashes out, those 100 active bets represent open interest. It shows how much activity and money are involved in the market. The more open bets, the higher the interest.
Similarly, in the stock market, high open interest means more traders are holding positions in a stock’s futures or options, suggesting strong market activity or confidence.
- Rising OI means more people are entering positions, showing increased market participation.
- Falling OI means people are exiting positions, showing reduced confidence or uncertainty.
Now back to our meme coin story…
Open interest in DOGE, SHIB, and PEPE has seen a notable decline, based on CoinGlass data:
- DOGE has dropped over 2%, with open interest at $3.58 billion
- SHIB is also down more than 2%, now at $182.98 million
- PEPE leads the decline, falling over 7% to $596.26 million
That’s not pocket change. This sharp decline in OI means investors are pulling out their funds, especially from derivative markets. In simple words, they’re saying, “You know what? I’ll sit this one out.”
It reflects a risk-off sentiment, where investors prefer to wait and see rather than gamble with highly volatile meme coins. And when everyone starts heading for the door at once, prices naturally start to drop.
Price analysis of meme coins
Let’s break it down further for each major meme coin:
Dogecoin (DOGE)
DOGE is currently (at the time of writing) hovering near $0.2195, close to both its 50 day EMA and the lower boundary of a symmetrical triangle pattern. A break below $0.2115 could send it sliding to $0.1909, a level seen earlier in August.
The RSI is neutral at 51, and the MACD is flat, not much to get excited about unless DOGE can close above $0.2407, which could reignite a rally toward $0.2848.
Shiba Inu (SHIB)
SHIB is in a bit of hot water after losing 50% of its weekend gains. If it doesn’t hold the $0.00001200 support, the next stop could be much lower. MACD and RSI are again signaling weakness, with RSI dropping below 50, a classic bearish sign.
A bounce above the 50-day EMA ($0.00001300) could offer temporary relief, but even then, resistance near the 200-day EMA ($0.00001409) looms large.
Pepe (PEPE)
PEPE is the worst-hit of the trio, with OI dropping over 7%. The risk of a Death Cross (when the 50-day EMA crosses below the 200-day EMA) is growing, which would be a major bearish signal.
It’s clinging to the $0.00001000 level, but if that breaks, $0.00000900 is the next likely support. On the upside, PEPE would need to reclaim $0.00001117 (200-day EMA) to even begin a recovery.
Boztech’s advice on managing this downtrend
Alright, now that we’ve painted a not so pretty picture, what should you do next? Boztech says it’s time to keep a cool head and a sharp strategy.
- Don’t chase falling knives: When prices drop quickly, it’s tempting to “buy the dip.” But not every dip is a discount, some are just the start of a larger fall.
- Watch technical levels closely: Support and resistance levels matter more than ever in sideways or bearish markets. Wait for confirmation before entering trades.
- Stay away from high leverage: The falling open interest shows that leveraged positions are being closed. This isn’t the time to YOLO into high-risk trades.
- Diversify your exposure: Meme coins are inherently volatile. Don’t keep your whole portfolio in dog-shaped or frog-themed assets. A little exposure is fine, but balance it with more stable coins or sectors.
- Set stop-losses and manage risk: Treat every trade like a business decision. Protect your capital first, profits come later.
As they say, “every dog has its day” and that might just apply to meme coins, too.
Wrapping up
The current downtrend in meme coins isn’t just about price action it’s part of a larger shift in investor sentiment. One thing is pretty clear that traders are backing off for now. Still, meme coins are known for their unpredictability. Just when you think they’re done for, they bounce back stronger than ever. Whether this is just another bump in the road or something more serious, only time will tell.
If you want more crypto insights, analysis, and market updates, follow Boztech blogs, where we help you turn crypto chaos into clarity. Make sure to stay informed, trade responsibly, and don’t let FOMO (or panic) run your portfolio.
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