Is a Meme Coin Bubble Bursting? ETH Drops 3%, XRP Plunges 10%, Ethereum-Reserve Stocks Tumble

TradingKey - Following a surge in altcoin prices fueled by the passage of U.S. stablecoin legislation, the rally appears to be cooling — with growing concerns over a potential bubble. On Wednesday, July 23, Ethereum (ETH) fell 3%, Ripple (XRP) plunged nearly 10%, and Ethereum-reserve-linked stocks like SharpLink Gaming (SBET) sharply corrected.

Altcoin Correction After Hot Rally

ETH traded below $3,600, down around 3% on the day — underperforming Bitcoin, which declined just 0.81%.

Most major altcoins posted steep losses:

• XRP: -9.53%
• Solana (SOL): -5.56%
• Dogecoin (DOGE): -7.29%
• Stellar (XLM): -9.54%
• Polkadot (DOT): -5.51%

Ethereum Price, Source: TradingKey

The sell-off in ETH dragged down several U.S.-listed companies holding Ethereum as treasury assets:

• SharpLink Gaming (SBET) dropped over 10% intraday, and was down 7.26% at the time of writing
• Bitmine Immersion (BMNR) fell 4%

A Rally That Was Too Fast?

Ethereum has surged from around $2,200 at the end of June to nearly $3,600 — a 60% gain in just one month. Analysts warn that such rapid appreciation could lead to a healthy correction.

From a technical perspective:

• The Bollinger Bands on ETH’s daily chart have expanded to their widest level since April 2021, signaling extreme volatility and a potential consolidation
• The 14-day Relative Strength Index (RSI) has crossed above 70, entering the overbought zone

Bubble Warning Signs Flash

On Tuesday, Glassnode, a blockchain analytics firm, warned that a crypto market bubble may be forming. Key red flags include soaring open interest (OI) in derivatives markets and record-high leverage along with speculative positioning.

Glassnode noted that OI across the four largest altcoins — including ETH — surpassed $40 billion on Monday, reaching an all-time high.

Long-Term Outlook Still Bullish

Despite the pullback, analysts remain constructive on ETH’s long-term prospects.

Bitwise analysts argued that the recent rally is being driven by structural demand, not just sentiment:

• Growing inflows into spot Ethereum ETFs
• Corporate treasury accumulation (e.g., SharpLink, Bitmine)
• Institutional adoption of tokenization and smart contracts

They expect net buying pressure on ETH to continue rising over the next 12 months, supporting higher prices over time.