The end of the memecoin supercycle is here, with capital reallocation hinting at an impending broader market correction. Bitcoin has rebounded after a dip, causing top memecoins to trade below their previous peaks. This suggests a potential distribution phase and the end of the memecoin craze. As Bitcoin surges, high-cap memecoins face a slump, indicating a possible market cooldown. However, low-cap memecoins may see a short-term surge as investors explore speculative assets. SHIB, the second-largest memecoin, has consistently outperformed Bitcoin but is now experiencing inflows as traders offload their holdings. The next memecoin supercycle could initiate once Bitcoin reaches exhaustion around $66K.

SHIB

The second week of October kicked off with Bitcoin [BTC] breaking resistance to test the critical $64K level. This marks a strong rebound after last week’s dip, where BTC briefly touched $58K. During that phase, top memecoins posted significant surges, with some even posting triple-digit gains as capital flowed out of Bitcoin. However, many of these memecoins are now trading below their previous peaks, signaling a potential distribution phase as market focus returns to BTC.As Bitcoin resurges and most high-cap memecoins face a slump, AMBCrypto sees a pattern that suggests that the market may be nearing the final leg of the memecoin craze rather than the start of a “super cycle.” If this trend persists, a broader market cooldown could be imminent.Top memecoins are lagging behindThis chart indicates that the past week marked a memecoin-led cycle, with 3 out of every 5 coins dominated by memes, each achieving over a 30% surge in just one week.This moment marked a shift; while low-cap altcoins usually gain traction when BTC hits a bottom, traders are now flocking to high-cap memecoins for high-risk, high-reward opportunities.In essence, the recent BTC correction triggered a capital flight into these larger tokens. However, as traders lock in profits, funds may soon flow into smaller, low-cap memecoins, reminiscent of altcoin surges seen after every Bitcoin top.SHIB, the second-largest memecoin with a market cap exceeding $10 billion, has consistently outperformed Bitcoin, posting higher daily gains during each green candlestick on the daily price chart. This surge can be attributed to a strategy employed by traders during Bitcoin pullbacks, as they shift their focus to accumulating high-cap memecoins. Notably, the past week saw net outflows of 58 billion SHIB from aggregate exchanges.However, with Bitcoin now breaking through a key resistance level, renewed optimism has prompted these traders to offload their holdings, resulting in a surge of SHIB inflows totaling 62 billion.In summary, many top memecoins may be poised for a correction, as Bitcoin gears up for its next parabolic ascent. Thus, the next memecoin supercycle could initiate once BTC reaches an exhaustion point around $66K.Low-cap tokens might see a short-term surgeTypically, an increase in BTC price boosts investors’ risk appetite, prompting them to explore more speculative assets, including lower-cap memecoins.Despite their higher volatility, these assets are viewed as attractive options for quick and substantial returns. As a result, they may experience a short-term surge in demand.One notable example is Mother Iggy [MOTHER], a celebrity Solana-based memecoin with a market cap of $85 million. The token has regained traction, surging over 5% in the last 24 hours to $0.83. This marks a significant recovery from last week’s 10% plunge.Realistic or not, here’s SHIB’s market cap in BTC’s termsHistorically, a similar pattern occurred during the first week cycle when BTC reached $62K, allowing MOTHER to test the $1 ceiling. If this trend continues, the memecoin could be on the verge of a bullish reversal.Overall, the market is seeing major memecoins stagnate while smaller market-cap tokens surge, mirroring the trend after BTC reaches a top when capital shifts into smaller coins as larger players distribute their holdings.