Open interest is decreasing for all crypto asset classes, but meme tokens are affected the worst. More than 52% of meme open interest left the market, as traders grew skeptical of both blue chip memes and newly minted trending tokens.
Traders are in no hurry to rebuild open interest for Bitcoin (BTC), Ethereum (ETH), or other asset classes. After the latest series of liquidations, traders are more cautious in allocating funds to derivative positions, as most keep their dry powder on the sidelines.
BTC open interest is back at $31.4B on crypto centralized exchanges, though growing more cautiously. ETH open interest is almost flat at $12.51B, down 23.5% over the past month. Solana (SOL) open interest remains flat at $2.92B, sliding by 6.2% in the past month.
February caused a slowdown and further delay for all assets. BTC and ETH remain slightly positive, as liquidity is still sufficient. SOL has a bigger drawdown, mostly due to the outflow of DEX trading and a recent rethinking of meme tokens.
After months of remaining the top narrative, memes are now the biggest losers for the past week, erasing 99% of narrative value based on a selection of tokens. Meme performance was also the worst for the past month, and in the span of the past three months. The meme sector has almost erased its performance for 2024, losing its appeal as a source of fast gains.
Meme tokens often rally along with strong BTC performance. In the past weeks, BTC traded sideways, and meme token volumes were more subdued, as the market lost its enthusiasm. Along with short-term trading, even cult tokens are losing holders. SPX6900 (SPX) remains the only big cult meme with an expansion of new wallets, as most cult tokens have already lost over 70% of their value.
Overall open interest for all crypto assets is drifting sideways at $63.95B, down from last year’s December peak above $94B. Funding rate often turns negative, as traders are reluctant to bet on altcoins.
Meme tokens see the biggest outflows in open interest
Meme tokens were the most affected by the outflow of risk-taking. In the past week, open interest decreased from $45M to $37M for PEPE. DogWifHat (WIF) open interest sank from $215M down to $165M. Along with BONK, those three major blue chip tokens saw significant outflows of open interest from their peak trading season. Former stars SHIB and FLOKE also saw a deep cut in their open interest.
Lowered open interest may mean a mix of liquidated positions, as well as a general withdrawal of traders. The mindshare of meme assets is also down, replaced by airdrops and a return to rallying older coins and tokens.
The narratives shifted, with memes and AI agents seeing the biggest outflows of activity for the past month. | Source: Alphanomics
The meme token market as a whole is down to $75B, led by a deep decline in DOGE and other leading tokens. Even community tokens with long-term holders felt the weakness. Staples like FARTCOIN took another downturn, erasing gains down to $0.35.
Memes were already in decline as AI agents took over. Memes continued with several new narratives, including the Official Trump (TRUMP) token. The launch of LIBRA and several other rug pull tokens, along with information of insider traders, further undermined the meme market.
Whales still buy meme assets, but they are much more selective. Most of the tokens seeing inflows are related to DEX or have some utility, and pure memes have almost disappeared.
The narrative shift affected memes and AI agents the most. In the past month, memes lost between 20% and 37.2% of their trading volumes, depending on token selection and metrics. Liquidity is making a return into utility projects and a smaller selection of memes, AI agent tokens or similar assets.
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