BRC-20 Meme fever sweeps the Bitcoin network, BTC "peaks" and falls below $27,500

Bitcoin fell below $27,500 on Monday as trading volume for meme tokens based on Bitcoin’s BRC-20 standard surged to a two-year high, with on-chain data showing that speculative frenzy in meme coins has historically signaled a short-term “top” or bearish reversal for Bitcoin.

Meme popularity "sucks blood"

According to blockchain observer James Tolan’s Dune Analytics-based tracker, crypto market meme coin trading volume was $2.3 billion last week, a sixfold increase from $387 million the previous week and the highest level since May 2021.

The speculative frenzy was led by pepecoin (PEPE), a token themed after the sad frog emoji, which was launched in mid-April with a maximum supply of 420 trillion. Last Friday, PEPE's market value exceeded $1 billion, eventually peaking at $1.82 billion, an amazing achievement for a cryptocurrency that was launched less than a month ago . Bitpush terminal data shows that as of press time, PEPE's market value is $931 million.

The PEPE craze has also spurred speculation on other low-cap tokens such as DINO , WSB, CHAD and 4TOKEN, which have risen by hundreds of percent in the past two weeks. Tolan believes that historically, speculative frenzy in altcoins with no real use cases has foreshadowed a bearish reversal in Bitcoin.

At press time, Bitcoin is trading below $27,500, down 5% over a 24-hour period. The U.S. Dollar Index (DXY) has rebounded slightly. The U.S. Dollar Index measures the greenback against major currencies including the euro. Bitcoin typically moves in the opposite direction to the U.S. Dollar Index, which is currently hovering around 101.37 after briefly rebounding to 101.75 on Friday following the release of unexpectedly strong U.S. jobs data .

BRC-20 Token Fees Hits Multi-Year High

As the hype around memecoins grows, the transaction volume on the Bitcoin network continues to increase. According to data from crypto data analysis platform Dune Analytics , the daily minting fee for BRC-20 hit an all-time high of 247 BTC on May 7, indicating that the fee has reached its highest level in two years.

The BRC-20 token standard is an experimental token standard on the Bitcoin blockchain, modeled after Ethereum 's ERC-20. Created in March by an anonymous on-chain analyst named Domo (@domdata on Twitter), the BRC-20 token standard allows programmers to create and send fungible tokens through the Ordinals protocol.

Unlike ERC-20 tokens, BRC-20 tokens do not use smart contracts and require a Bitcoin wallet to mint and trade these tokens.

The BRC-20 token standard has exploded in recent months, especially with the emergence of meme coins such as Pepe (PEPE) and Memetic (MEME). On May 3, the Bitcoin network paid more than $3.5 million in fees, a 400% surge from the end of April. BTC Ordinals had a total fee of 641 BTC, and data from YCharts showed that the average Bitcoin transaction fee reached $19.21 on May 7.

The number of BRC-20 tokens on the Bitcoin network has exceeded 14,000, many of which are meme coins. The total market value of these coins exceeds $952 million, and the 24-hour trading volume exceeds $10 million.

Selling before CPI

Speaking of macroeconomic factors, traders this week will focus on the U.S. Consumer Price Index (CPI) for April, which will be released on May 10, to measure the Fed's progress in reducing inflation. The index tracks price changes for a wide range of goods and services. Other key data include initial jobless claims and the Producer Price Index. When the Fed actively raises interest rates to curb inflation, investors usually sell "risk assets."

CPI is called a volatility catalyst for the entire cryptocurrency. Anonymous trader Aqua analyzed in a tweet that the market may see "tactical selling" and BTC/USD will enter a wider correction range. He wrote: "If the CPI data is good, we may have another chance to go high, but this looks more and more like a correction, and we will definitely see market adjustments in the next few weeks."

The central bank's fight against inflation is far from over and riskier assets are likely to continue to suffer this year, according to a report released by global asset management company BlackRock on May 8. The company expects central banks around the world to further tighten monetary policy in the coming months, pushing the global economy into recession.

Joe DiPasquale, CEO of crypto fund management company BitBull Capital, analyzed that since the rebound around mid-March, neither BTC nor ETH has tested recent support. DiPasquale said that BTC may test the support level between $25,000 and $27,000 before rebounding again, and buying BTC and ETH on dips is a "reasonable strategy."