This week we dive into the meme token speculation taking over crypto. We discuss some of the eye-popping returns recorded this week, while evaluating their deeper effects not only on Ethereum, but also on Bitcoin, which recently entered into the meme token game.
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Bitcoin fees more than tripled week over week as meme tokens found their way into Bitcoin’s blockchain
- Ethereum fees spiked 51%, with the PEPE token increasing by 700% in a week and driving speculative demand
- Both Bitcoin and Ethereum set new yearly highs in terms of fees
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
- Bitcoin and Ether recorded relatively low inflows into centralized exchanges, with most relevant metrics being on the demand-side over the past month
Meme Tokens Drive On-Chain Activity to Year Highs
PEPE and his friends are back after being relatively quiet last week. The new frog-themed token on Ethereum is approaching a $1B market cap, generating a 4,000% return from its price just 17 days ago per Coingecko data. This led meme tokens to once again lead trading activity on decentralized exchanges.
Gains & Rug Pulls — Massive returns and losses are being realized in crypto’s latest meme token frenzy
- Asides from Pepe, other new tokens such as Wojak and Peepo have climbed more than 600% in the last seven days
- This speculation has also attracted scammers, though, with many “rug pulls” being reported this week
- Legacy meme tokens such as Dogecoin and Shiba appear to be excluded from the hype, with both dropping in price over the past week
As a result from speculative activity picking up, Ethereum gas fees have spiked to their highest levels in 2023.
$50 Swaps — High gas fees have led Uniswap trades to cost users as much as $50 (excluding trading fees and MEV)
- High gas costs have led to a significant reduction in ETH supply due to its burn mechanism
- Over $60M worth of ETH has been burnt this week alone, with Ether’s supply decreasing at an annualized rate of 1.4% per ultrasound.money
- Uniswap transactions have been responsible for over 35% of all ETH being burnt as meme tokens eclipse NFTs
Meme Tokens Arrive to Bitcoin
Creation of BRC-20 Tokens — A new token standard has emerged for people to create fungible tokens on top of Bitcoin
- BRC-20 tokens where created just two months ago as an experiment, leveraging Ordinals inscriptions to store new tokens on top of satoshis
- This standard has been embraced by the meme token community, with a different version of the PEPE token being traded on Bitcoin alongside thousands of other assets
- The market cap of BRC-20s has climbed to over $160M this week and led to a new all-time high in Bitcoin daily transactions
Two-Year High in Fees — Bitcoin fees reached their highest level since May 2021
- While fees are climbing they are still significantly lower than on Ethereum, with the average daily transaction on Bitcoin costing $6 vs $17 on Ethereum yesterday per IntoTheBlock data
- In both cases, high fees may hinder users but help improve the networks’ security by incentivizing more miners/validators to join
Overall, the recent meme token frenzy may be the wildest price action in crypto since 2021. While most of the activity here is inherently speculative, it is benefiting the underlying networks, leading to a reduction in ETH supply and reviving Bitcoin network activity. Though fortunes may have been made in the past few days it is worth being cautious as more scammers seek to take advantage of the recent meme token hype.
Read more: https://medium.com/intotheblock/meme-tokens-drive-on-chain-activity-to-year-highs-fa116d9887e4
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