Memecoin Market Volume Shows Fluctuating Trends: What’s Driving the Short-Term Action?

The memecoin market has been experiencing a rollercoaster of activity and trading volume over the last week.

From March 11 until today, trading volume has been low and very volatile but with certain peaks of heightened activity that have traders watching very closely for any signs of a breakout or major shift. And despite all this, there are some possible short-term trader opportunities, especially in the wake of a pretty recent spike in volume that seems to have been caused by inflows of smart money.

Volume Trends and Market Activity

For the last week, trading volumes of memecoins have shown an erratic nature, reflecting the broadly unpredictable niche they occupy in the cryptocurrency market. Lackluster trading periods have punctuated the otherwise frenetic and unfathomable pace of recent crypto market action. But some trading periods have recently exhibited volume reexpansions. And yesterday was one of those days, when memecoins collectively started raking in more than $5 million in trading volume—a level we hadn’t seen in weeks. And appears we’re not even two full trading days into the new work week. Then again, Friday night and Saturday are often two of the quieter periods in the crypto trading week.

The renewed interest in particular memecoins is what is reflected by the sharp uptick in volume. Some may even see this as a new window of opportunity for quick profits in the memecoin space. This renewed interest is most clearly seen with large players, who usually have a noticeable impact on the market. But are these guys really going into memecoins now? What does it mean for the market overall? And what should traders in the memecoin space do?

Yet, after the surge yesterday, the volume has dropped today. Even though the market might still fluctuate before the day is over, the trend looks to have settled into a more muted state for now.

This return to a lower volume isn’t weird with memecoins; they tend to have quick bursts of activity followed by back-and-forths between consolidation and pullbacks.

Where the overall market is headed remains anyone’s guess, with traders pondering whether our current lull will last. By tomorrow afternoon, we should have a better sense of whether our activity level is heading back up or if we’re stuck in the low volume.

Opportunities and Risks in the Memecoin Market

For individuals aiming to reap profits from memecoins, the recent proceedings in the market offer up both chances and hazards. The volume trend may give off an aura of unpredictability, but for short-term traders who can dazzle us with their clairvoyance in identifying key trends ahead of the big price moves, the increases in volume that have been lately recorded in the memecoin market serve as a kind of trader’s paradise. Yesterday, the volume in the memecoin market spiked above $5 million for what was a very brief period of time, and this spike momentarily positioned trading action in the memecoin market as, well, not memetic at all. Traders who managed to catch this wave were able to profit, but for those unable to time the trade perfectly, the volume increase served as more of a cruel taunt than a real opportunity.

Then again, the volume drop today suggests that the market might be returning to its familiar low-volume state, in which there is less chance for significant price movement. There is no arguing that low-volume trading gives rise to conditions in which the price can move a lot—for instance, in reaction to a tweet. But high-volume trading makes for a stable market, in which low-probability, high-magnitude price moves are less likely to happen. Unless, of course, the market decides to swing in the other direction.

Key Takeaways

Examining the overall movement of the memecoin market from March 11 until now, several principal conclusions can be drawn:

1. Fluctuating Volume: The volume trend has been inconsistent, with periods of low trading activity followed by sudden spikes. The $5 million spike seen yesterday shows that there is still significant interest and liquidity when certain conditions are met.

Smart Money Inflows: The increase we saw in the volume for $JLP and #fartcoin looks to have been driven by “smart money” entering the market. When we see this kind of action, it usually signals that large players are on the hunt for memecoin opportunities, which can lead to some nice (and sudden) price movements.

3. Uncertainties Ahead: The market’s volume today has receded back, but with the day still unfolding, it’s hard to say whether this will be the start of a prolonged period of lower activity or a new surge could happen at any moment.

4. Short-Term Trading Opportunities: Even with fluctuating volume, there are still prospects for those who are willing to take on short-term risk. The memecoin space offers very few trade setups that aren’t essentially pure plays on timing. For those who can time their entrances and exits correctly, however, the memecoin space offers quick bursts of activity and profit.

To conclude, the memecoin market might be quiet overall, occasionally coming alive with bursts of trading volume, but within it are opportunities for those looking to make quick, volatile trades. Yesterday’s sudden burst of action was a reminder of the nature of memecoins—high-risk, high-reward. Today’s return to relative absence of trading action illustrates the unpredictability of this market—a trait both good and bad for traders. The unpredictability means traders must stay alert; something might happen at any time.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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