Volume of futures tracking meme coins continued to rise massively on Saturday as bets against non-serious tokens lost a cumulative $50 million in the past 24 hours, a sign of irrational exuberance.
Data from Coinglass shows shorts, or bets against, on dogecoin, shiba inu, pepe, floki and bonk saw over $50 million in liquidations in the past 24 hours, contributing to price surge among these tokens.
Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).
Pepe (PEPE), the frog-themed meme token on Ethereum, was up as much as 100% to set record highs. WIF, the dog-themed token on Solana that was issued in November was up as much as 80% to become one of the first prominent meme tokens to cross the $1 price mark.
Meme coins started to come into focus last week as proxy bets on the growth of whichever blockchains these tokens are based on. Ethereum-based dogecoin (DOGE), shiba inu (SHIB), pepe (PEPE) and floki (FLOKI) have captured most of the meme trading volume on that network, while bonk (BONK) and dogwifhat (WIF) have acted as Solana proxies.
Bullish bets on DOGE set a record on Thursday with $1 billion in opened positions. Nearly 70% of those betting were longs, or on the continued growth of the tokens. DOGE prices are up more than 50% since CoinDesk first reported the peak volumes.
Open interest in PEPE, SHIB, BONK and FLOKI has similarly grown multifold to a cumulative $1.5 billion in the past few days, Coinglass data shows. A rise in futures bets indicates new money entering the market.
Meanwhile, the CoinDesk 20 Index (CD20), a benchmark for the biggest and most liquid cryptocurrencies, jumped nearly 5%.
Meme tokens are usually considered to have no intrinsic value but are quickly gaining favor among traders.
Some, like the Avalanche Foundation, a non-profit that maintains the Avalanche blockchain, have even started to invest in meme tokens built on the network in recognition of the online culture and memetic value that such tokens can drive among investors.
Market observers say meme coins are also a profitable, albeit risky, way to gain from ecosystem growth.
“While meme tokens have been out of the narrative, they often pump following blue chip rallies, and traders reposition from ETH and BTC to altcoins,” Nick Ruck, COO of ContentFi Labs, told CoinDesk in a Telegram message last week.