Dogecoin & Shiba Inu’s Rally Stalls: Is the Memecoin Trend Dead?

• Dogecoin (DOGE) and Shiba Inu (SHIB)’s stalled rallies suggest that the memecoin trend is weakening.
• Without shill and bullish newsflow, DOGE and SHIB have failed to keep up with the crypto market rally in January.
• Factors such as Elon Musk’s reported development of Twitter Coin instead of integrating Dogecoin, lack of user traction on Dogechain, and high Network Value to Transaction Value ratio all point to a weakening memecoin trend.

Memecoin Trend Weakening

The memecoin phenomenon didn’t prove as effective in the last month’s crypto market rally, as the gains of the top cryptocurrencies in this category barely outperformed Bitcoin. The monthly gain of Bitcoin (BTC) stood at 44.5%, while the top two meme-based coins, Dogecoin (DOGE) and Shiba Inu (SHIB), gained 27% and 40.7%, respectively.

Dogecoin Losing Popularity

Dogecoin is losing its popularity, as its most prominent supporter Elon Musk is reportedly developing an independent Twitter Coin instead of integrating his favorite cryptocurrency with the social media platform. For the greater part of 2022, DOGE/USD performed poorly except for when Elon Musk acquired Twitter. The acquisition raised hopes in the Dogecoin community about increased cryptocurrency usage but without any tangible announcements or reports from Twitter hinting at Dogecoin usage, these hopes were short lived and caused a reversal price surge from October to two months later. The Google search volume for the token has also subsided since Q1 2022.

Dogechain Failing to Gain Traction

Another factor influencing the price of DOGE last year was the launch of Dogechain – an EVM-compatible blockchain that uses DOGE as its gas-paying token. However, Dogechain failed to gain user traction becoming a place mainly for “shitcoin” trading; currently less than 1% of DOGE is bridged on Dogechain.

NVT Ratio Suggests Price Overvaluation

Lastly, on-chain data for Dogecoin suggests that it may be overpriced; measured by Network Value to Transaction Value ratio metric – which measures market capitalization against transaction volume – historical NVT chart shows that it could be overpriced; oscillating between 10 and 100 for past eight years with few outliers during bull markets.

Conclusion

Overall it appears that without shill or bullish newsflow driving prices higher there has been little support for either DOGE or SHIB; factors such as lack of user traction on doge chain and high NVT ratio all point to a weakening memecoin trend overall