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Floki, Dogwifhat and Pepe lead memecoin rally alongside Ethereum ETF approvals
So called memecoins have been recovering over the past week – and among the five cryptocurrencies that gained the most are four Solana-based tokens. Floki leads (up 35%), followed by dogwifhat (32%), Pepe (27%), and Bonk (22%), according to data from CoinGecko as of Tuesday morning. Bonk reached highs of $0.00004387, missing its all-time high of $0.00004547 in March by the slimmest of margins.
Price increases override Securities and Exchange Commission greenlighting eight spot Ether exchange-traded fundswith companies like Black stoneGrayscale and Fidelity among filers. Memecoins, considered the highest risk and highest reward part of the crypto industry, often witness notable price swings during a pro-crypto news cycle. On the other hand, Ether is up a modest 2% since Thursday’s approvals, trading at $3,847 on Tuesday morning.
The ETF approvals have “people bullish on the edges of the currency space,” Derek Horstmeyer, a finance professor at George Mason University, told Fortune.
In fact, Google Trends data shows that search interest in “Ethereum” over the past 12 months is near an all-time high, and memecoins are “heavily boosted” by this kind of market attention, says Pat Doyle, a researcher at Amberdata blockchain.
“The theory is that as money flows into the ecosystem through ETFs, it often finds its way into these smaller projects,” Jonathan Bixby, president of Phoenix Digital Assets, told Fortune. Memecoins have surged recently due to their “small caps” compared to those of other cryptocurrencies, he says.
Memecoins occupy just a fraction of the market capitalization of major coins: Floki has a market capitalization of just $2.9 billion, compared to Ethereum’s $460 billion, according to data from CoinGecko. In other words, Bixby suggests that marginal currency investors may be anticipating a rising tide effect that will lift all boats once ETFs begin trading.
However, Matt Ballensweig, managing director at BitGo, told Fortune that he doesn’t attribute the recent growth of some memecoins to ETF approvals or a single event, but is “a sign that momentum in other Layers 1 (like Solana) still strong.”
He added: “Solana has essentially solidified itself as the network with the most ‘speculative fun’ as traders continue to stake memecoins on decentralized exchanges.”
One reason Ether has shown minimal price movements since Thursday is likely because, so far, the SEC has only approved Forms 19b-4. These initial registrations submitted by future issuers allow the securities to be listed on exchanges. But for trading in financial instruments to begin, the SEC must first approve issuers’ S-1 filings. These forms describe to potential investors and the SEC the structure of the asset, how it will be managed and, in this case, how it plans to mirror the performance of the underlying asset – Ether tokens.
“We cannot recall any time when there were unapproved S-1s after 19b-4 approval. I don’t think there is a precedent,” said Eric Balchunas, senior ETF analyst at Bloomberg. previously told Fortune. He estimated the forms would take about two weeks to be approved.