The recent surge in the price of Floki (FLOKI) has aligned with the launch of its tokenization platform, TokenFi. However, as the meme coin reaches new heights, questions arise regarding the sustainability of its rally.
Additionally, the rise in Bitcoin (BTC) to $35,000 this week has had a ripple effect on meme coins, with FLOKI outperforming its peers in terms of percentage gains.
FLOKI’s Soaring Price and Contributing Factors
As of October 27, FLOKI witnessed an impressive surge of over 140%, reaching $0.00004261, marking its highest level in five months. The coin, known for its unconventional marketing strategies, gained momentum following the news of New York-based Grayscale Investments filing for a new spot Bitcoin exchange-traded fund (ETF) on NYSE Arca.
Furthermore, FLOKI’s recent gains received an additional boost from the launch of its tokenization platform, TokenFi, which introduced its native token, TOKEN, on the same day. Notably, users can stake their FLOKI holdings to receive TOKEN tokens.
FLOKI’s Overbought RSI and Potential Correction
FLOKI’s ongoing rally has pushed its daily relative strength index (RSI) to an overbought level not seen since January 2023. Historically, overbought RSIs have preceded correction periods in FLOKI’s price. Previous instances of overbought RSIs have been followed by significant price declines, raising concerns of a potential downward correction in the coming days or weeks.
If FLOKI’s rally stalls, the FLOKI/USD pair could face a decline towards its 0.5 Fibonacci retracement line near $0.00003548 by October 2023. A decisive close below this level may lead to a price drop of around 20%. To the 0.236 Fib line at approximately $0.00003069 in November 2023.
On the other hand, should the price manage to break above the current resistance level of $0.00004027, it could target a run-up towards $0.00004078.
Memecoins’ Performance and Challenges
Most memecoins have underperformed leading cryptocurrencies like Bitcoin in 2023, with some even recording year-to-date (YTD) losses. Dogecoin (DOGE) rallied over 30% following the Grayscale Bitcoin ETF announcement. But had YTD returns of only 1.3% compared to BTC’s 105% gains.
Similarly, Shiba Inu (SHIB) is down 2.75% YTD despite a recent 25% rally. Notable exceptions include Pepecoin (PEPE), which has surged over 500% since its debut in April 2023. And FLOKI, boasting YTD returns of approximately 435% as of October 27.
Memecoins tend to attract speculators seeking maximum returns in a short time. Typically during periods of strong risk sentiment in the crypto space. However, they can experience sharp declines when sentiment wanes. As seen with DOGE’s 90% crash from its 2020-2021 bull market peak. The future trajectory of memecoins largely depends on developments in the ETF space and their impact on BTC’s price.
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