The once-booming momentum of memecoins has slowed considerably since mid-November, with price data suggesting a shift in market dynamics. Meanwhile, decentralized finance (DeFi) tokens have surged in popularity, buoyed by renewed investor interest and positive sentiment.
Memecoin Market Stalls
The GMCI Memecoin Index, which tracks the performance of top meme tokens by market capitalization, has remained stagnant over the past few weeks. The index currently stands at 508.5, fluctuating around the 500 mark since mid-November. This comes after an impressive rally earlier in the month, when the index jumped from 274.5 on November 1 to 523.5 by mid-November.
“The memecoin market appears overheated, with exchange listings driving token price spikes in mid-November, followed by growing investor fatigue fueled by controversies like Pump.fun,” noted Min Jung, a research analyst at Presto Research.
Pump.fun, a prominent memecoin launchpad on the Solana network, recently suspended its live streaming features amid reports of harmful behavior, including threats of self-harm and instances of child and animal abuse.
“As a result, many memecoins have shifted focus to AI and other niches,” Jung added, highlighting a trend where investors are turning to microcap tokens in search of higher returns.
DeFi Tokens Gain Traction
Conversely, the DeFi sector has witnessed a resurgence. The GMCI DeFi Index, which tracks leading DeFi tokens, rose significantly from 82.47 on November 14 to 111.43 at the time of writing, marking a 35% increase.
Arthur Cheong, founder and CEO of Defiance Capital, attributed the shift to capital rotation. “We’ve seen money moving back to ETH and DeFi projects on the EVM chain like AAVE, ENA, and ENS,” he said.
Cheong suggested that this shift may indicate traders moving away from an overheated memecoin market or seeking better fundamentals in DeFi projects.
Broader Market Sentiment
Donald Trump’s reelection as U.S. President has also fueled optimism around DeFi. Pro-crypto policies from his administration are expected to pave the way for a decentralized future, further boosting interest in DeFi tokens.
Min Jung sees the recent DeFi rally as part of a “broader rotation” back to fundamentals. “With the anticipated rate-cut cycle, lower rates are channeling capital into DeFi, supporting the ‘DeFi 2.0’ thesis,” Jung explained.
As the memecoin market cools, the ongoing pivot to DeFi underscores a renewed focus on projects with strong utility and solid foundations, shaping the next chapter of the cryptocurrency market.
