Meme Coin Mania Challenges Bitcoin, But BTC Fundamentals Are Sound

Bitcoin nosedived after the release of a new meme coin; Melanie which was developed by the Trump family. The coin, which is linked to Donald Trump's wife

A new meme coin, Melanie, which is linked to Donald Trump's wife, has attracted funds from more popular cryptocurrencies, causing Bitcoin to nosedive.

According to a recent YouTube video by Rover, the change in liquidity was the main factor that led to the drop in price of Bitcoin. In the moments immediately preceding the drop, Bitcoin had put in a CME gap, a technical market structure that often precedes price retracement. After the decline, analysts expect the BTC price to rise and retrace the gap, which could send the price back up to $104,000 in the next few days.

Despite signs of improvement, Melanie's launch has raised concerns across the crypto market. It appears that the meme coin is still able to pull out liquidity that would have otherwise been directed towards BTC or other altcoins.

At the time of writing, BTC is still at $107,648, having risen by 3.37% in the last 24 hours.

So far, Melanie has attracted around $492 million in investment. This has raised concerns of a potential sharp price correction, given the massive injection of liquidity into the system. The price of meme coins has always been quite volatile, and many expect that the same will happen to Melanie.

Technically, Bitcoin is at a critical support level that was previously a downward resistance line. This is the level through which the cryptocurrency is trying to move past in an effort to begin the recovery process. If BTC fails to rally and cross this level, it can experience further declines.

In the broader market, the environment is still largely unpredictable. It has been seen that new presidents have often presided over a strong market environment. Trump has also supported BTC and is reported to have suggested the creation of a Bitcoin Strategic Reserve which many investors see as a positive for the long term.

However, the overall market situation has been rather volatile lately, but the dominance of BTC has not been affected. The rising number of addresses containing more than 100 BTC indicates that the big players are still optimistic, which could help the cryptocurrency withstand the current meme coin hypothesis.

The market is now in the consolidation mode with BTC is stable at the current support level. Investors are waiting for a breakout that may signal the beginning of an altcoin season. If BTC starts to go up, it can also cause other crypto currencies to go up as well.