Analysis of the S&P 6900 Index allocation and the shift in sentiment in the meme coin market

Since the market cap surpassed the 2021 high at the end of 2024, have memecoins already died out?

SPX6900 has plummeted by more than 10% in the past 24 hours, underperforming the overall memecoin market (down 6.8%). Other popular memecoins with similar declines include Pump.fun [PUMP] and Useless Coin [USELESS].

Can SPX6900 [SPX] reverse this capital loss, as its trend seems to be shifting?

S&P 500 Index Plummets, but Interest Rises

The SPX6900 index is in a bearish structure.

At the time of writing, the memecoin price is declining, approaching a region that previously triggered a brief rebound. This price level is $0.44, coinciding with the low on October 10.

Despite the price drop, selling momentum is weakening, as confirmed by the MACD indicator. The signal line has also started to turn upward, indicating that selling pressure has been exhausted.

Open interest (OI) has risen from $8 million to $11.47 million, in line with the trend of weakening selling momentum. This divergence between price action and open interest usually signals a bullish reversal pattern.

Additionally, the price is fluctuating near the previous rebound area.

A drop below the $0.44 region will accelerate the decline, but holding above this area could lead to a rebound to at least $0.75. This price level was previously a resistance and has triggered sell-offs three times.

Based on the current price action, what does the behavior of market participants indicate?

On-chain Data Reflects Complex Sentiment

Looking at the weekly trading data for memecoins, buyers still dominate despite the downward trend in SPX6900 index price.

Since early December, the CVD index for both spot and futures traders has continued to rise. However, the histogram shows that their buying power, while slowly declining, still exists.

However, data from CryptoQuant's research indicates that retail traders do not share this optimism. Their trading activity remains neutral, continuing the usual pattern of entering the market at its peaks.

In fact, CZ referred to eliminating those traders who buy the dip when most cryptocurrencies are cheap.

But can the S&P 500 index rebound on its own while the entire sector is struggling?

Will Shifts in Consumer Behavior Trigger an S&P 500 Index Rebound?

Reportedly, since mid-Q3, the memecoin sector has lost most of its dominance. CoinGecko wrote,

“At its peak, the memecoin market cap exceeded $150 billions. Since then, its dominance, narrative, and investor behavior have all changed dramatically... So far this year, overall interest in memecoins has dropped by 81.6%, in line with the downward trend in market cap.”

Although the S&P 500 index shows potential signs of a rebound, the broader sector may drag it down.

Even Dogecoin [DOGE] is struggling as its market share continues to decline due to the proliferation of memecoins. This indicates a battle for liquidity in the market.

Final Thoughts

• SPX is leading the entire memecoin sector, but the price suggests a possible short-term bullish reversal.
• The memecoin market is weak, with market cap dropping from $150 billions to $43 billions, which may hinder the S&P 500 index's rebound.