The recent surge of Bitcoin (BTC) to a staggering $35,000 has not only captivated the attention of cryptocurrency enthusiasts but also propelled several memecoins to impressive gains. Among these memecoins, Floki (FLOKI) stands out, surpassing its competitors in terms of percentage increases. With a surge of over 140% to reach $0.00004261, the highest it has been in five months, Floki’s controversial marketing tactics have undoubtedly played a part in its rally. The cryptocurrency further gained momentum when Grayscale Investments, based in New York, filed for a new spot Bitcoin exchange-traded fund (ETF) on NYSE Arca. Moreover, the launch of Floki’s tokenization platform, TokenFi, and its native TOKEN token has added fuel to its ongoing price rally. However, with an overbought daily relative strength (RSI) that hasn’t been seen since January 2023, the possibility of a correction period looms over Floki.
In the past, Floki experienced steep price declines after encountering overbought RSIs, similar to the current situation. Such a pattern raises concerns about a potential downside reaction in the coming days or weeks. If Floki’s rally decelerates, the FLOKI/USD pair faces the risk of dropping towards its 0.5 Fibonacci retracement line at approximately $0.00003548 by October 2023. A decisive close below this level could even propel the price towards the 0.236 Fib line around $0.00003069 in November 2023, resulting in a 20% decline from the current price levels. However, on a more positive note, if Floki manages to break above its resistance level of $0.00004027, it could signal a potential run-up towards $0.00004078.
Memecoins’ Struggle Against Top-Ranking Cryptocurrencies
While Floki has displayed an impressive rally, the performance of memecoins overall has struggled to match that of leading cryptocurrencies such as Bitcoin. Despite Dogecoin (DOGE) experiencing a 30% surge following the Grayscale Bitcoin ETF announcement on October 19, its year-to-date (YTD) returns as of October 27 are a mere 1.3%. In contrast, Bitcoin has achieved gains of 105% in the same period. Similarly, Shiba Inu (SHIB) has rallied nearly 25% in the past seven days but is still down 2.75% YTD. Notable exceptions to this trend are Pepecoin (PEPE), which has risen over 500% since its debut in April 2023, and Floki, boasting YTD returns of approximately 435% as of October 27.
The allure of memecoins lies in the potential for maximum returns in minimum time, particularly when risk sentiment in the crypto space is strong. For instance, during the 2020 to 2021 crypto bull market, Dogecoin surged a staggering 67,475% compared to Bitcoin’s 1,700% gains. However, the downside to memecoins is the equally extreme potential for dramatic declines when risk sentiment diminishes. Dogecoin, for example, experienced a 90% crash from its peak during the 2020 to 2021 bull market. Therefore, the future fate of memecoins largely depends on upcoming updates and developments, particularly the impact of the ETF on Bitcoin’s price.
Floki’s recent surge, backed by controversial marketing tactics, the Grayscale Bitcoin ETF announcement, and the launch of its tokenization platform, has garnered significant attention. However, an overbought daily RSI suggests a potential correction in the near future. While memecoins, including Floki, offer the allure of quick and substantial returns, they still face challenges in outperforming top-ranking cryptocurrencies like Bitcoin. The fate of memecoins ultimately rests on the market’s sentiment and ongoing developments in the cryptocurrency ecosystem. As the crypto space continues to evolve, enthusiasts eagerly await the impact of these factors on the prices and sustainability of memecoins in the long run.