As the crypto market’s recent selloff begins to slow, Dogecoin, the largest memecoin by market cap, has taken the hardest hit.
Dogecoin tumbled 25% last week amid a crash in the broader crypto market. After reaching a three-year high of 48 cents earlier this month, the original memecoin shed nearly half its value, falling as low as 27 cents before stabilizing around 32 cents on Monday.
Memecoins overall have suffered the biggest losses in the last seven days with Dogecoin’s rivals Pepe and dogwifhat falling 25% and 30%, respectively.
Matt Hougan, chief investment officer at crypto asset manager Bitwise, told Fortune that this comes as no surprise because memecoins often experience harsher selloffs than “more established” cryptocurrencies during pullbacks.
Hougan said that because there are fewer “value buyers,” or investors who prioritize value over price, for memecoins than for larger-cap cryptocurrencies like Bitcoin and Ethereum, memecoins often see larger liquidations during market downturns.
“When they [Bitcoin and Ethereum] pull back, there are buyers who enter the market because they have confidence that the prices will rebound as the markets recover,” he said. “In memecoins and small-cap crypto assets, there are no value buyers. When the markets pull back, there’s no one who’s waiting to step in at a lower price for Doge.”
Hougan attributed the recent pullback to the Federal Reserve’s latest meeting in which the central bank decided to lower interest rates for the third time this year but also indicated that there would be fewer-than-expected rate cuts in 2025, signaling tighter economic conditions. This triggered investors to sell risky assets, including crypto and more specifically, memecoins.
Despite the recent tumble, the crypto market has had a stellar year, boosted by renewed investor interest after President-elect Donald Trump won a second term and promised to support a positive regulatory environment for the industry, including creating a strategic Bitcoin stockpile.
Dogecoin is up over 230% this year, partly due to tech billionaire Elon Musk’s new role as one of Trump’s closest confidants. Trump tapped Musk to head a new department aimed at curtailing government spending known as the Department of Government Efficiency, or DOGE—a clear nod to Musk’s favorite cryptocurrency—sustaining Dogecoin’s relevance.
“As we look into 2025 the broad setup for crypto is so overwhelmingly positive that I expect a bull market in Bitcoin, in Ethereum, and probably in these high-profile memecoins like Doge,” Hougan said.
