According to CoinGecko data, the total market value of memecoins decreased by 2.7% in the last 24 hours, falling to $55.48 billion. This indicates that the upward momentum experienced last week has been reversed.

Bonk (BONK) experienced the biggest decrease with 6%. Floki (FLOKI) followed with a loss of 3.3% and Memecoin (MEME) with a loss of 3%.

DOGE, the memecoin with the highest market value, lost 2.1% in value on a daily basis and its market value decreased to 22.74 billion dollars. It should be noted that DOGE still accounts for approximately 41% of the total market share of the memecoin industry.

Its rival, SHIB, also lost 2.4% on May 6, dropping its market cap to $14.29 billion and cementing its position as the second most popular memecoin.

Historically, bull markets are often driven by rallies in altcoins. However, consistent with the current memecoin price declines, Total3, the total market cap of all cryptocurrencies excluding Bitcoin and Ether, has experienced a pullback following its rise that began in October 2023.

The still ongoing downward trend in altcoins is confirmed by Total3’s movement in the downward sloping parallel channel. The RSI value has also fallen from 89 to 62 in the last seven weeks, indicating that market conditions still support a downward move.

If Total3 fails to break above the upper boundary of the $660 billion descending channel, altcoins, including major memecoins, could continue their decline in the coming weeks.

Dune Analytics data reveals that memecoin transaction flows across all blockchains, including Ethereum and Solana, collectively fell 81% from a peak of approximately $998.55 million in March to $191.88 million in the week ending May 3. This shows that investors’ interest or confidence in the sector has decreased recently.

Looking at individual memecoins, historical data from CoinMarketCap shows that DOGE’s trading volume dropped by approximately 50% between March 7 and May 6. Similarly, transaction volumes of SHIB and PEPE decreased by 88% and 51% respectively during the same period.

According to the US Federal Reserve Board’s Open Market Committee meeting statement dated May 1, the reduced likelihood of an interest rate cut in 2024 has increased the risk aversion trend in the cryptocurrency market, especially affecting memecoins, which are among the most profitable assets of 2024 so far. As the US economy strengthens, investors are increasingly attracted to safe-yielding assets such as US Treasuries rather than non-yielding assets such as digital currencies.

As a result, this reduces the appeal of risky investments, including memecoins. Therefore, investors may be using the profits they make from memecoins in the first quarter of 2024 to invest in other sectors of the crypto ecosystem.