Here’s Why Meme Coins Shiba Inu, Dogecoin, and ApeCoin Are Blasting Higher Today

What happened

Following the collapse of Silvergate Capital last week, shares of most cryptocurrencies plunged. For meme coins Shiba Inu (SHIB 3.71%), Dogecoin (DOGE 3.93%), and ApeCoin (APE -0.32%), the declines were among the worst in the sector, as investors flocked to safe haven assets. 

However, as the market has recovered today, these meme coins have seen an impressive rebound. As of 2:30 p.m. ET, Shiba Inu, Dogecoin, and ApeCoin have surged 5.9%, 7.1%, and 10%, respectively, over the past 24 hours. 

This surge, which aligns with the price action of the broader crypto market, reflects improved sentiment among investors in higher-risk assets. The Treasury Department, Federal Reserve, and Federal Deposit Insurance Corp. (FDIC) stepped in to backstop SVB Financial depositors on the weekend, while also taking control of New York’s Signature Bank, which was also forced to close. These actions appear to have bolstered investor confidence in the markets, with most risk assets outside of the banking sector seeing gains today.

So what

For higher-volatility meme tokens such as Shiba Inu, Dogecoin and ApeCoin, market volatility can manifest itself in an outsize way. Often viewed as high-beta proxies for an already volatile and risky asset class, meme tokens tend to appreciate or decline to a greater degree than the overall market.

While today’s moves in these three tokens are actually relatively muted relative to other digital assets (as many investors flock to higher-quality projects), there’s certainly a reason why some investors focus their attention on these meme coins. Traders and speculators betting on momentum-driven rallies in either direction may view these three digital currencies as a way to play these trends over the short term.

Now what

For long-term investors, these three tokens may be rightly viewed as too volatile to own. Given the ongoing market turmoil across most asset classes this week, I think such a perspective is warranted. These three meme tokens are ones I follow, but do not invest in, for this reason.

It’s unclear whether the fallout from these bank closures will continue. Confidence remains weak in the banking sector, and while most of the turmoil has already taken place in banks with close ties to the crypto sector, it’s also possible more instability could materialize. Thus, while this move is certainly welcome from crypto investors, it ought to be viewed cautiously, in my view.