The meme coin's market capitalization increased by 7%, topping $136 billion on Thursday. Dogecoin and Shiba Inu prices rose slightly on the day, but Pepe corrected. Bitcoin regained $100,000 on Wednesday, with the meme coin rising alongside the largest cryptocurrencies. Overleveraged derivatives traders' positions were flushed out in the correction, and open interest recovered on Thursday.
Bitcoin (BTC) rose above $100,000 after a brief correction on Tuesday. Memecoin tumbled early in the week following the drop in BTC, but started to recover on Wednesday. In the past 24 hours, the top three meme coins have started to recover, and on-chain indicators support the hypothesis of further appreciation for the tokens.
On Thursday, Dogecoin (DOGE) and Shiba Inu (SHIB) registered slight gains, while PEPE (PEPE) corrected at the time of writing.
Meme coin market capitalization exceeds $136 billion
The market capitalization of the meme coin sector rose 7% in the past 24 hours as the top meme tokens increased their value and recovered from setbacks earlier this week. According to CoinGecko data, the market capitalization exceeded $136 billion.
Dogecoin (DOGE) rose slightly on Thursday, trading near the $0.41500 level, nearly 14% below its 2024 peak of $0.48434.
One of the main drivers of Dogecoin’s recovery this week has been the liquidation of overleveraged trades across derivatives exchanges. According to data from Coinglass, derivatives trading volume fell by 34% in the past 24 hours. Over the same period, open interest (OI), or the value of open derivatives contracts across exchanges, rose nearly 5%.
The long-short ratio is an indicator that measures the balance between long (buy) positions and short (sell) positions, and is over 4 for all derivatives exchanges such as Binance and OKX. This ratio is well above 1, which means that most traders have long positions as market sentiment is positive.
Derivatives traders across exchanges are bullish on DOGE, while the average long-to-short ratio is 0.9573.
Dogecoin derivatives data. Source: Coinglass
Shiba Inu (SHIB) and Pepe also recorded a surge in open interest on Thursday. SHIB open interest rose slightly by less than 0.5%, and 1000PEPE (a financial derivative derived from PEPE/USD x 1000 index price) recorded a 3.22% increase in OI.
Bitcoin traders are likely to profit and rotate capital into meme coins
Santiment's on-chain data shows a positive spike in Bitcoin's network realized P&L metric. A significant spike in non-performing loans indicates profit-taking activity by traders. In previous cycles, traders typically rotated funds from Bitcoin to altcoins after taking profits. This is called “capital turnover.”
Network realized P&L and Bitcoin price Source: Santiment
If this pattern repeats, Bitcoin traders could funnel profits into meme coins, stimulating demand and supporting the bullish case for DOGE, SHIB, and PEPE.
Additionally, the trading volumes of Dogecoin, Shiba Inu, and PEPE recorded a significant spike from November 6th to December 10th. This spike coincided with a rise in prices, so it is interpreted as a positive sign.
An increase in trading volume, coupled with a rise in price within the same period, typically indicates increased relevance and demand among traders, and may be a result of increased inflows to the exchange platform.
Transaction volume (DOGE, SHIB, and PEPE). Source: Santiment
At the time of writing, Bitcoin remained steady above $100,000, trading at $101,505 on Thursday.
