On Monday morning, the crypto industry was a sea of red as Bitcoin and other cryptocurrencies slumped. Bitcoin dropped from last week’s high of $62,000 to $58,000, triggering a deep dive among other altcoins and meme coins.
Meme coins become worst performers
Meme coins were among the worst performers due to their high volatility. Dogwifhat (WIF), the popular Solana meme token, plummeted by almost 10% to trade at $1.6680, marking a 65% drop from its all-time high.
Pepe’s price has dropped by over 54% from its record high and was trading at $0.000078, while Brett’s price moved to $0.09, its lowest point since Thursday.
These meme coins retreated in a high-volume environment. Pepe had over $715 million in volume, Dogwifhat had over $351 million, and Brett had $30 million.
It was unclear why these tokens broke down on Monday. A likely reason is that a sense of fear has returned in the market as Bitcoin formed a death cross pattern, which happens when the 200-day and 50-day moving averages make a crossover.
It has formed this pattern using simple moving averages. If it works out, Bitcoin could experience a deep dive in the coming months. The last time a golden cross – the opposite of a death cross – Bitcoin soared by over 115%.
Before that, Bitcoin formed a death cross in January 2022, leading to a 60% crash below $16,000 as the Federal Reserve hiked interest rates and Terra and FTX imploded. In most cases, meme coins are more volatile than Bitcoin. As such, if Bitcoin falls by 1%, you can expect these tokens to fall by over 3%.
The other likely reason these meme coins are falling is that investors are patiently waiting for the upcoming US inflation report, which is scheduled for Wednesday. This important data will provide more information on what to expect from the Fed in September.
Bitcoin and meme coin silver lining
Still, some positives could push Bitcoin and other meme coins higher. First, the Fed could decide to slash interest rates in its meeting in September, a positive thing for risky assets like Bitcoin, meme coins, and stocks.
Second, as we saw last week, when tokens crash on Monday, they are more likely to bounce back later in the week. Bitcoin dropped from over $56,000 on Monday last week to $49,000. It then bounced back to $62,000 by Friday.
Third, Bitcoin has formed a bullish flag, cup, and handle, and a falling broadening wedge pattern on the weekly chart. In most cases, these patterns lead to a strong rebound. If this happens, meme coins like WIF, PEPE, and Floki will bounce back.
