In the past few weeks, the hype around major memecoins has slowed, while DeFi tokens have gained significant momentum. The GMCI memecoin index, which tracks the performance of top meme tokens, has been hovering around 500 points since mid-November. Earlier in the month, it had climbed sharply from 274.5 on November 1 to a peak of 523.5 by November 15, but since then, growth has stalled.

Experts believe the memecoin market may have become oversaturated. Exchange listings caused a brief surge, but controversies like the Pump.fun scandal have dampened investor enthusiasm. Pump.fun, a Solana-based memecoin platform, faced backlash after reports of harmful behavior on its live streams, including threats and abuse, leading to the feature being disabled.

As interest in large-cap memecoins wanes, many projects are shifting towards AI and other niches. Investors are also exploring smaller, lesser-known tokens in search of higher returns.

DeFi Tokens Make a Strong Comeback
While memecoins stagnate, DeFi tokens have seen notable growth. The GMDEFI index, which tracks leading DeFi projects, has jumped 35% in two weeks, reaching 111.43 points from 82.47 on November 14. Popular Ethereum-based DeFi projects like AAVE, ENA, and ENS are benefiting as traders move their funds away from memecoins.

Arthur Cheong, founder of Defiance Capital, suggests two factors are at play: traders shifting capital into DeFi for better value and the memecoin rally naturally slowing down. Positive sentiment around DeFi has also been bolstered by Donald Trump’s reelection, raising hopes for pro-crypto policies that could integrate decentralized finance into mainstream finance.

Market trends show a broader shift back to projects with strong fundamentals. Min Jung of Presto Research highlights that anticipated interest rate cuts are encouraging capital to flow into DeFi, further supporting what some are calling “DeFi 2.0.” This has fueled the recent surge in DeFi token prices.