Meme coins have carved a niche in the cryptocurrency market, attracting both seasoned and new investors with their high volatility and community-driven hype. Among them, Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) continue to dominate as the top three meme coins by market capitalization. On Thursday, September 12, all three coins extended their gains slightly, with DOGE and SHIB each rising by 1.43%, and PEPE leading the pack with a 2.49% increase.
A Look at the Profitability Landscape
According to data from the crypto intelligence platform IntoTheBlock, between 45% and 70% of wallet addresses holding DOGE, SHIB, and PEPE are currently profitable at the prevailing price levels. Specifically, 4.52 million wallet addresses holding Dogecoin are in profit, with DOGE trading at $0.1023. Similarly, 607,840 wallet addresses holding Shiba Inu are profitable at $0.000013, while 143,030 wallet addresses holding Pepe are seeing profits at $0.000007.
This profitability among investors highlights the sustained interest and potential for gains within the meme coin market, despite its inherent volatility.
Concentration Among Large Holders: A Double-Edged Sword
A significant factor influencing the price movements of these meme coins is the concentration of holdings among large investors, often referred to as ‘whales.’ Data indicates that between 60% and 70% of these meme coins are held by large holders—wallet addresses that control more than 1% of the circulating supply. For Dogecoin, 62% of the supply is concentrated in such wallets, while Shiba Inu and Pepe have even higher concentrations at 73%.
This high level of concentration among a few large holders can reduce the overall liquidity of the asset and limit the number of tokens available for trading on exchanges. Consequently, this can heighten price volatility, as movements by a few key holders can have outsized effects on the market.
Market Value to Realized Value (MVRV) Insights
Further insights from Santiment reveal that the Market Value to Realized Value (MVRV) ratio for Dogecoin and Shiba Inu is currently negative on the 30-day timeframe. The MVRV ratio is a metric used to assess whether an asset is overvalued or undervalued relative to its historical cost basis. A negative MVRV ratio suggests that DOGE and SHIB are currently undervalued, potentially offering a buying opportunity for investors who are bullish on the long-term prospects of these assets.
What’s Next for Meme Coins?
While the profitability of a significant portion of wallet addresses paints a positive picture, the high concentration of meme coins in whale wallets remains a critical factor to watch. Such concentration can lead to rapid and unpredictable price swings, making these assets riskier compared to more widely distributed cryptocurrencies.
As meme coins continue to evolve from mere jokes to serious investment vehicles, understanding the dynamics of whale concentration, liquidity, and market sentiment becomes essential for investors. The current trend of profitability among meme coin holders, coupled with their undervaluation signals, could suggest further potential gains. However, the inherent volatility of these assets requires investors to tread carefully and stay informed on market movements.
In conclusion, Dogecoin, Shiba Inu, and Pepe continue to capture the imagination of the crypto community. With a significant percentage of their investors currently in profit, these meme coins demonstrate the unique allure of high-risk, high-reward investing in the world of digital assets.
