MEME: Community and Speculation

OPENING REMARKS

Driven by the upcoming Bitcoin halving event, the wave of Bitcoin ETFs, and the continuous significant fluctuations in market sentiment, Bitcoin has not only experienced extreme volatility but also sparked a revival of meme cryptocurrencies led by tokens like $PEPE and $WIF. In just the past month alone, these coins have surged by over 600%.

Data from Coingecko indicates that in the first quarter of 2024, meme coins, represented by MEME, emerged as the most profitable cryptocurrency trend, with an average return rate of 1312.6% for its main tokens. Solana, closely followed by the newcomer Base, became key platform for trading meme coins. This is attributed to their large active user base on DEX platforms and low transaction fees, making them the preferred choice for trading low-cap cryptocurrencies.

The chart below illustrates the performance of key meme coins compared to Bitcoin since early March.

Source: TradingView

It’s worth noting that the profitability of MEME coins is 4.6 times that of RWA and 33.3 times that of Layer 2 (according to Coingecko, Layer 2 ranked lowest in terms of return rate in Q1 of 2024).

Source: Coingecko

If you find these charts confusing, don’t worry. Many people find MEME coins and the broader crypto culture a bit challenging to grasp. For the uninitiated, MEME coins are essentially digital tokens that typically serve no practical purpose other than to evoke “emotions” and foster a sense of community. While some may dismiss them as worthless, the fact is that they have managed to integrate well into today’s experience-centric economy to some extent.

What the market teaches us is that the fundamentals of assets often play a secondary role in their potential for value appreciation. MEME coins represent an internet culture where people can come together and create meme value out of thin air.

Source: Pepe on X

The GameStop phenomenon of 2021 is a perfect example, laying the groundwork for the wild success of meme coins like $DOGE, $SHIB, and more recently, $PEPE and $WIF. Those adept at spotting cultural trends early on may fare well with MEME coins, as they can anticipate where people’s attention might shift.

In an era where our attention is constantly being competed for, it’s not surprising that MEME coins can quickly become valuable. However, our fleeting attention means that interest may fade as quickly as it arises. This is a double-edged sword, often leading to people feeling disillusioned when prices stop rising, typically resulting in sudden market downturns as everyone shifts focus to the next big thing.

The Surge of MEMECOIN

From 2020 to 2021, MEME coins emerged as significant players in the cryptocurrency scene. Leading coins like $DOGE and $SHIB not only established their positions but also paved the way for smaller, newer coins. Their popularity showcased the unique charm of the MEME coin market, driven by speculative investment, volatility, and enthusiastic communities.

Taking Dogecoin), created based on the Shiba Inu meme, as an example, it now represents a significant cultural movement within the cryptocurrency realm. It demonstrates how an internet meme can evolve into a community-driven movement, with supporters deeply invested in both the meme and the currency. As the first MEME coin, $DOGE remains a key indicator of interest in the crypto community, despite not reaching its “DOGE to $1” goal.

Elon Musk’s tongue-in-cheek support and his decision to accept $DOGE for Tesla purchases significantly boosted its visibility, highlighting its influence and growth potential.

The MEME coin market has evolved beyond dog-themed coins to encompass various themes, with recent success seen in cat-themed coins. This shift underscores the dynamic nature and growing diversity of the MEME coin ecosystem.

Source: Messari

Over the past four years, the development of more complex L1 and L2 ecosystems is worth noting, with some creating unique spaces for MEME coins. Particularly, Base has attracted significant attention, with $DEGEN, for example, reaching a market cap of $800 million within a few weeks.

Since its launch in August 2023, Coinbase’s Layer 2 platform has welcomed 5.03 million new users, experiencing rapid growth, especially in March 2024.

Source: DuneAnalytics

As of today, some leading MEME coins on Base, including $Brett, $Degen, $Toshi, $Normie, $Mochi, and $Doginme, have reached a total market capitalization of $1.6 billion.

Apart from Base, the popularity and support for MEME coins on mature L2 platforms like Arbitrum and Optimism have declined. These platforms are primarily designed for DeFi,

which remains their core focus. Therefore, they are expected to perform well as DeFi regains momentum.

Exploring other L2 alternatives, notable MEME coins can be found on ZkSync, such as $ZORRO and $MEOW, as well as coins on Scroll and Linea, such as $SCROLLY and $LUBE.

Outside the Ethereum ecosystem, Solana has emerged as a significant force in MEME coin trading on L1 networks. It leads in terms of daily active DEX traders and trading volume, surpassing user liquidity in other major ecosystems. This makes Solana the center of a vibrant MEME coin market. The enthusiasm of the Solana community for MEME coins and low-cap trading participation enables it to challenge, and sometimes even surpass, the daily USD trading volume of Ethereum-based DEXs.

Solana is the home to several leading MEME coins, such as Dogwifhat, $Bonk, Cat in a Dog’s World, Jeo Boden, Book of Meme, $Slerf, and $PopCat. The total market capitalization of the top 10 MEME coins on Solana has reached $7.6 billion.

Source: Messari

In the Solana ecosystem, Dogwifhat has emerged as the MEME coin highlight of the year. This dog-themed MEME coin is raising funds to purchase advertising space on the iconic spherical building in Las Vegas, known for its impressive display capabilities. So far, it seems that we’ll soon see an image of an adorable dog wearing a knitted hat on the spherical building. This initiative is expected to elevate the enthusiasm for MEME coins to a new level.

In summary, it’s noteworthy that the total market capitalization of all MEME coins is currently around $60 billion. Among them, Dogecoin, Shiba Inu, Dogwifhat, and Pepe hold prominent positions among the top 50 cryptocurrencies by market capitalization. However, this figure is still lower than the nearly $100 billion peak driven by Dogecoin’s significant growth in early 2021.

Source: Coingecko

Assessing The Success Of MEME Coin Investments

At the beginning of the article, we mentioned that those who are adept at identifying cultural trends early on may find success with MEME coins, predicting where people’s interests may shift. However, it’s evident that in the already volatile and risky crypto market, MEME coins represent the most speculative part. Thousands of MEME coin projects exist, but only a few can gather any community consensus, and even fewer can sustain it long-term. Most projects and investors are essentially gambling, hoping for a one-time big win. Nonetheless, we cannot ignore their role in the industry and the opportunities brought about by closely following narratives.

That said, here are some tips that may help you navigate these volatile waters:

● While real-world utility and strong fundamentals are crucial for most crypto projects and companies’ success, MEME coins operate differently. For MEME coins, community participation, and speculation are at their core. The energy and excitement of a community, amplified through social media and other platforms, drive MEME coin popularity. A dedicated community committed to its development and promotion is essential for ensuring the stability and growth of MEME coins.

● Be prepared for price volatility. While these fluctuations can provide profit opportunities, they come with significant risks. Also, be mindful of pump-and-dump schemes that may artificially inflate prices. Remember that negative sentiment may affect MEME coins’ acceptance and longevity more than other assets.

● As with other types of investments, the importance of research cannot be overstated when investing in MEME coins. With hundreds of MEME coins out there, ensuring your funds go into the right or at least higher-probability-of-success coins is crucial. Take a close look at the coin’s history, its team, and its position in the market.

● Only invest funds you can afford to lose and recognize the speculative nature of MEME coins. When investing in MEME coins, always have a plan for potential gains and losses. This is important because our fleeting attention spans may lead to people losing interest quickly and swiftly moving on to the next big event.

● Get in early. This may seem obvious, but considering the characteristics of those investing in MEME coins and how quickly these tokens rise, it’s more likely that people will sell their tokens for profit. They rise as fast as they fall, especially when community sentiment is superficial. The earlier you get in, the less likely you’ll be caught in a sell-off frenzy.

For instance, the Greythorn team has recently been closely monitoring MEME coin developments on Monad, especially after the rise of Base. This is because it’s a mature, highly anticipated chain. While we’re still waiting for its launch, there are signs that some community members are starting to foster a sense of community around the project through MEME coins. Look for early signs of growth, such as increased social media interactions, holder numbers, and trading volume, aiming for those showing sustainable, organic growth coins.

DOGINALS 和比特币 ORDINALS 的崛起

Over the past year, the crypto scene has been buzzing with the rise of Bitcoin ordinals, especially as Bitcoin ordinals, Nodemonkes, and Bitcoin Puppets have all experienced significant value growth.

The introduction of inscription has made it possible to create NFTs directly on Bitcoin, known as BRC-20 tokens. Unlike NFTs, these tokens are stored directly on the blockchain and are assigned a sequence number based on their mining order. This allows images or data to be attached to specific satoshis within the Bitcoin network.

Ordinals are seen by some as strategic investments in Bitcoin growth and are now making waves in the Dogechain ecosystem. Doginals, or Doge Ordinals, are becoming a popular narrative for those betting on the growing meme value of DOGE.

Purchasing Doginals is not straightforward, as it requires users to navigate the slow Dogechain and decide which ones to invest in. Nonetheless, for many, owning Doginals is becoming a symbol of dedication to the Dogechain community, and their increasing value only adds to this appeal.

As meme coins gain momentum, some believe that ordinals, especially Doginals, will follow suit, providing a unique way to showcase digital wealth. Dogechain is seen as the ideal platform for this trend.

Magic Eden is the preferred marketplace for trading ordinals, and there are rumors of a Doginal market potentially emerging. With the rise in the value of DOGE, it not only boosts its market but also increases the value of all related meme coins.

Conclusion

Unlike Bitcoin or Ethereum, which have clear purposes and mature technologies, meme coins often lack significant real-world value or utility. Their popularity typically stems from social media and online forums.

Due to their instability and lack of solid backing, investing in meme coins carries high risk and speculation. Although there are opportunities for quick profits, it’s important to approach these investments cautiously and conduct thorough research.

Despite the potential pitfalls, meme coins continue to attract those seeking high-risk, high-reward opportunities in the cryptocurrency community.

A study called “The State of Meme Coins” conducted by Chainplay in May 2023 revealed that 64% of investors have purchased meme coins, while 36% have avoided them. Surprisingly, although 70% acknowledge the risk of fraud, 79% view them as potential long-term investments. Approximately 73% liken them to gambling. Additionally, 20% entered the cryptocurrency space through meme coins, and 32% of meme coin buyers are newcomers with less than a year of experience.

More and more people are becoming interested in meme coins, which means they may become more popular and attract new investors as well as those already in the crypto world.

However, please remember that there are many scams and “rug pulls” in meme coins, where creators take funds and disappear, leaving investors with nothing.

So, if you are considering entering the crypto or meme coin space, be sure to proceed with extreme caution and do your homework!

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