The entire cryptocurrency market is rallying today, with more defensive and higher-beta tokens trading higher almost in lockstep. For meme tokens Shiba Inu (SHIB 3.11%) and Dogecoin (DOGE 4.52%), 24-hour price increases of 15% and 6.5% as of 12:45 p.m. ET, respectively, reflect increasingly bullish sentiment in the crypto sector. As a gauge for retail investor interest, these tokens are often looked to as directional indicators of where the market may be headed.
Shiba Inu's surge appears to be related to a recent community vote to reduce mining rewards with the network's upcoming Layer 2 blockchain, Shibarium. Similarly, Dogecoin is seeing interest surge ahead of its Dogecoin Core 1.14.6 release, which is intended to harden node and network security while also incorporating fixes and adjusting rewards on the network.
Solana (SOL 7.81%), while not a meme coin in its own right, does have one meme token on its blockchain investors are watching. Solana-based Samoyedcoin is also up approximately 7% over the past 24 hours, at the time of writing, as investors look for high-leverage options to gain exposure to this crypto rally today.
Amid the fallout from other high-yielding projects, and those offering rewards many now view as unsustainable, the moves Shiba Inu and Dogecoin have made to reduce rewards and focus on network stability certainly make sense.
The saying "if it's too good to be true, it probably is" has taken on a whole new meaning in the crypto world. At the end of the day, rewards come from somewhere, and whether it's inflation from minting new tokens, or Ponzi-like structures that only work when prices go up, crypto investors certainly have reason to worry about projects over-offering rewards.
Meme tokens remain among the most volatile and high-risk assets investors can consider for their portfolios. While there's certainly more developer activity being seen with the likes of Shiba Inu, Dogecoin, and other projects, the ultimate valuation investors can place on the real-world utility generated from these projects likely remains negligible. Accordingly, aside from bullish investor sentiment, there really aren't many fundamental drivers that can take these tokens higher over the long term.
That might change, but for now, investors may want to view these tokens as ultrasensitive gauges of investor sentiment. In today's session, that means some nice near-term rallies in these tokens. However, if the selling pressure isn't over, investors may want to prepare for more downside risk in the medium term with these dog-inspired tokens.