Meme Coins Slump as Bitcoin Forms Death Cross Pattern, But Silver Linings Emerge

Meme coins were among the worst performers on Monday due to their high volatility. Dogwifhat (WIF), the popular Solana meme token, plummeted by almost 10% to trade at $1.6680.

Monday saw a downturn in the crypto industry as Bitcoin and other cryptocurrencies experienced a sharp decline. Bitcoin dropped significantly from last week's high of $62,000, falling to $58,000 and triggering a widespread decline among other altcoins and meme coins.

Meme coins, known for their high volatility, were among the worst performers.

Dogwifhat (WIF), the popular Solana meme token, saw a steep decline of almost 10%, trading at $1.6680 with a 65% drop from its record high.

Pepe's price fell sharply by over 54% from its all-time high, trading at $0.000078, while Floki's price dropped to $0.09, marking its lowest point since Thursday.

These meme coins experienced a high volume of retreat. Pepe's volume exceeded $715 million, Dogwifhat's volume was over $351 million, and Floki's volume reached $30 million.

The reason behind the specific downturn for these tokens on Monday remains unclear. However, a possible explanation could be the return of fear in the market as Bitcoin formed a death cross pattern, which occurs when the 200-day and 50-day moving averages intersect.

This pattern, formed using simple moving averages, could indicate a deep dive for Bitcoin in the coming months. Notably, the last time a golden cross (the opposite of a death cross) occurred, Bitcoin soared by over 115%.

Previously, Bitcoin formed a death cross in January 2022, leading to a 60% crash below $16,000 as the Federal Reserve hiked interest rates and Terra and FTX imploded. In general, meme coins amplify Bitcoin's moves; if Bitcoin falls by 1%, these tokens tend to drop by over 3%.

Another possible factor contributing to the decline of these meme coins could be investors' anticipation of the upcoming US inflation report, scheduled for Wednesday. This crucial data will provide further insight into what to expect from the Fed in September.

Despite the downturn, some positives could drive Bitcoin and other meme coins higher. The Fed may decide to cut interest rates at its September meeting, which would bode well for risky assets like Bitcoin, meme coins, and stocks.

Furthermore, as observed last week, when tokens experience a Monday crash, they tend to rebound later in the week. For instance, Bitcoin dropped from over $56,000 on Monday last week to $49,000, but it bounced back to $62,000 by Friday.

Additionally, Bitcoin has formed bullish technical patterns on the weekly chart, including a flag, cup and handle, and falling broadening wedge, which usually indicate a strong rebound. If this occurs, meme coins like WIF, PEPE, and Floki will likely experience a bounce-back.

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