In This Article
The memecoin market took a significant dive on December 10, with popular tokens like Dogecoin (DOGE), Shiba Inu (SHIB), and Dogwifhat (WIF) experiencing sharp losses. These declines outpaced the broader crypto market sell-off, erasing much of the gains from a recent rally linked to former U.S. President Donald Trump.
Market Cap Dips to Three-Week Low
The memecoin sector's total market capitalization fell to $119.6 billion, marking its lowest point since November 27, when it briefly hit $118 billion. This represents a 21% drop in just 24 hours. At the same time, daily trading volumes for memecoins nearly doubled, reflecting heightened selling pressure as investors sought to cut their losses.
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Memecoin market capitalization and daily trading volume. Source: CoinMarketCap
Dogecoin Leads the Decline
Dogecoin, the largest memecoin by market cap, recorded a 5.6% loss in the past 24 hours. Its competitor, Shiba Inu, fared worse, losing 10.4% during the same period. In contrast, Ethereum-based PEPE was the only major memecoin to buck the trend, gaining 1.7%
Top memecoins’ price performance. Source: CoinMarketCap
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Open Interest Decline Precedes Memecoin Crash
The steep drop in memecoin prices on Dec. 10 was preceded by a significant decline in open interest (OI) across major tokens. Open interest, which measures the total number of unsettled derivative contracts, saw sharp reductions as traders closed positions amid growing bearish sentiment. PNUT led the retreat with a 30% decline in OI over the past 24 hours, signaling waning confidence in the token. Dogecoin (DOGE) followed closely, with its OI dropping over 20% to $3.1 billion—still nearly six times higher than Dogwifhat (WIF), which experienced a 27% drop in OI, settling at $519 million. Ethereum-based PEPE saw a more moderate decline, with OI falling 11% to $302.4 million.
Memecoin OI chart. Source: CoinGlass
The decline in open interest reflects reduced market activity and confidence as traders exited their positions, further exacerbating the memecoin sell-off.
Liquidation Event Shakes the Market
The broader crypto market recently experienced a high wave of liquidations, with over $1.7 billion disappearing within 24 hours. Remarkably, $1.3 billion was liquidated in just 12 hours, making this event the largest of its kind since 2021, according to data from CoinGlass.
Source: CoinGlass Among the most affected were memecoins, which saw significant disruptions. In particular, Dogecoin suffered the impact, with long positions valued at $72.6 million being wiped out. Shiba Inu was not spared either, as $22.35 million in long positions were liquidated. Additional losses included $7.9 million in PEPE longs and $3.6 million in WIF longs. This massive liquidation event parallels a similar situation during the flash crash on December 5, when $816 million in long positions vanished from the market. The recent turmoil seems to echo that tumultuous period, highlighting the volatile nature of the cryptocurrency landscape.
Bearish Sentiment Grows
The drop in open interest for memecoin derivatives indicates a bearish outlook, as traders closed leveraged positions in anticipation of further declines.
This sell-off echoes the start of the 2021 bear market and highlights the volatility of memecoins. During the December 10 crash, Bitcoin’s price fell by 11%, triggering a broader altcoin sell-off. Memecoins alone lost $1 billion in market capitalization. As market participants navigate this turbulence, memecoins remain a stark reminder of the high-risk nature of speculative assets in the crypto space.
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