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Bonk Meme Coin Loses 50% of Its Value, Is Meme Coin Done? Crypto Market Review, Jan. 6

Fri, 01/06/2023 - 23:50
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Arman Shirinyan
Meme coin that fueled rally on Solana loses half of its value in last few days
Bonk Meme Coin Loses 50% of Its Value, Is Meme Coin Done? Crypto Market Review, Jan. 6
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A meme-fueled rally on Solana, Ethereum's burn rate recovery and other interesting things are happening on the market right now. Despite the short-term nature of the aforementioned events, it gives us an important signal: investors are trying to push recovery on the cryptocurrency market, but there are fundamental factors that are not allowing this to happen.

Bonk got bonked

Meme coins on the crypto market are almost always short-lived, especially without proper market making and liquidity provision. Bonk has been widely distributed among holders of certain NFT collections, which leads us to an unpleasant conclusion: the most recent 56% correction on the meme asset is only the beginning of profit taking.

Bonk chart
Source: TradingView

The price of the meme asset might tumble at any given time and there is no buying power that would stop a further downslide. However, BONK is still trading way above the listing price. On some crypto exchanges the meme asset trades at $0.0000019.

The long-term future of BONK is unclear, but investors should put their hope on assets created purely for memes and fun. Otherwise, we will witness a situation similar to Shiba Inu, when an asset created for fun and memes turned out to be a disaster for thousands of investors who lost their funds by grabbing the token at local highs.

Ethereum coming back

Despite the problems Ethereum faced back in December and November, the network is clearly on a recovery path as the burn rate and activity on the network have entered the uptrend. The issuance surplus has been reduced to 4,200 ETH from the most recent peak of 5,000 ETH.

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Luckily, the overall recovery of the market in terms of liquidity and volatility led to increasing activity on Ethereum. Additionally, the increase in volume in staking contracts acted as fuel for the network.

The price performance of ETH has not changed in the last few days of the new year. Right now, Ether is moving in a symmetrical triangle, which is a signal of an upcoming surge of volatility. Unfortunately, it is not yet clear what direction the second-biggest cryptocurrency will choose, but at least some traction on the market will give us information we lack.

Solana reacts to Bonk

Unfortunately, Solana's most recent rally was mostly fueled by the aforementioned meme currency, as did its elevated network activity, which was part of the price recovery we saw recently.

Expectedly, as soon as the only source of liquidity was gone from the network, Solana was already reversing downward. For three days, SOL has been battling with the 50-day moving average and repeatedly trying to break it. But without the support of both retail and institutional investors, no progress has been made, even with such a strong driver as BONK.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.