Some people hate meme coins and are waiting for them to die as an asset class, some people are fascinated by them, and others are making millions and continue to invest in virtual coins with images of kittens, dogs or politicians.
However, no matter how we treat meme coins, the meme coin sector continues to spawn hundreds of new tokens and show a multiple growth in market capitalization.
In 2024, the impact of memecoins on the crypto market is no longer purely emotional or speculative in nature, but has taken on clearly defined economic contours. And while they were once spoken of with a certain amount of disdain and irony, investors are now seriously including them in their investment portfolios. Analytical data speaks for itself: over the past six months, the market capitalization of the meme coin sector has almost doubled, reaching $110.73 billion as of this writing.
Why have coins with no fundamental value and no practical use become so popular?
This article is devoted to the phenomenon of meme coin culture in cryptocurrencies, the current position of “non-serious” coins in the market, and possible prospects for their development.
Introduction to the topic
Memecoins are digital assets that carry a certain idea close to the Internet community and develop through viral marketing methods. They usually have no practical value. As a rule, they reflect social events or sentiments and are expressed through animated images of Internet memes, celebrities, politicians, favorite characters, cute animals or symbols close to a certain circle of people. According to some experts, memecoins carry a kind of cultural code that includes the self-identity, lifestyle and social views of their owners.
Most meme coins began as a joke or an experiment. That’s how the first meme coin, Dogecoin (DOGE), was created by software engineers Billy Marcus and Jackson Palmers. Issued five years after the appearance of the first cryptocurrency token with a smiling dog symbolized irony in relation to bitcoin, whose value, according to the authors, was overestimated. And the public accepted the humorous coin with joy. The token, based on the Doge Internet meme, gathered a large community around it. And now more than 10 years have passed, and despite the low value, DOGE continues to lead in the ratings of meme coins and occupies a place in the top of the largest cryptocurrencies (at the time of writing it costs $0.37, ranks first in terms of capitalization among meme coins and sixth among all). It should be noted that only the undisputed leaders are above it in the ranking: Bitcoin, Ethereum, Tether USDT, Solana and BNB. Reputable, productive projects that shape the market and in which institutional capital flows. Even the oldest token, Ripple (XRP), as well as USDC, the world’s most legalized cryptocurrency, are on CoinMarketCap’s list below Dogecoin, a coin with little to no applied value.
A paradox? Or a pattern? Let’s investigate further.
Today, there are more than 3000 meme coins on aggregator platforms. Most meme assets have unlimited issuance and all tokens are instantly unlocked and put into circulation. They are entertaining and give the user a sense of community with a particular social group. The simple economics of meme coins and their effect on sentiment are intimate and appealing to the user.
Media and the profitability of meme coins
In a recent study, a team of researchers from the University of Pennsylvania analyzed the impact of news and social media discussions on the profitability of cryptocurrency investments. After studying data on the profitability of more than 300 crypto projects, they came to interesting conclusions: the event (news) background provided by specialized publications can provoke volatility, but insignificantly affects the mood and activity of traders and investors. While information, opinions and discussions in social networks have a significant impact on decision-making.
Social media and meme coin popularity are closely related, and the impact of meme coins discussed on social media on users’ cryptocurrency investments can be clearly traced.
For example, let’s look at the impact of meme coins on investor behavior in this November’s presidential race in the United States. PolitFi tokens, which represent politicians’ personalities or ideas, rose and fell in tandem with a candidate’s ratings. For example, to date, the most capitalized political meme coins are those associated with Donald Trump (there are 9 of them in the top ten). However, such positions in comparison with coins dedicated to Kamala Harris (which, by the way, managed to gain a good popularity) and Joe Biden (which are currently trading around $0) occupied priority positions even before the official election results were announced.
The Role of Memcoins in the Crypto Economy
In November of this year, the research department of Binance Research published a report with data showing the economic potential of meme coins. The share of meme coins among all altcoins has almost tripled (!) in two years. If in 2022 meme tokens made up 4% of the altcoin sector, in 2024 — already 11%. It can also be assumed that in addition to the factors that positively influence the entire cryptocurrency industry, the meme coin sector has a high internal potential — more than 75% of all tokens of this type were created within the last year.
The most active age group of investors is the millennial generation (76.5%). That is, the core of the target audience is formed by users from 25 to 45 years old. Among the characteristics of the target group, analysts inсlude “the desire for accessible and transparent financial instruments” and “the desire for freedom and openness, which is not available in traditional centralized financial systems”. That is, investors are attracted to the low price and easy accessibility of meme coins, as well as the idea of freedom embedded in them.
Memcoins can raise significant capital quickly. For example, the Dogwifhat token (WIF) reached $1 billion in market capitalization in just 104 days, while Shiba Inu (SHIB) took 279 days. However, project survival statistics remain low — only 2% of launches are successful, and only 0.23% of meme coins reach a capitalization of over $1 million.
How meme coins affect cryptocurrency volatility
Memcoins increase cryptocurrency volatility. High volatility is a key feature and risk of meme tokens. They can rise and fall by hundreds of percent in a matter of days, depending on public opinion or social media sentiment. The popularity of Dogecoin and Shiba Inu, historically established and regularly supported by opinion leaders such as Elon Musk, allows these tokens to show a more or less smooth price movement curve. However, meme coins and their economic consequences for investors are massively unpredictable.
A case in point is the story of a squirrel named Peanut, whose adoption you’ve probably heard about. This squirrel was a social media star thanks to his owner and became the mascot of the PNUT (Peanut the Squirrel) meme. After authorities decided to put him down for suspected rabies, the public got excited and the price of the token quadrupled, from $0.41 to $1.7 in one day, Nov. 13. Now it’s around $2, as influencers in the form of Donald Trump Jr. and, once again, Elon Musk have gotten involved in the poor dead squirrel situation. And since in the end it turned out that the squirrel did not have rabies, and its death was in vain, we can safely assume that the PNUT asset will not become cheaper in the near (short, as for all meme tokens) future.
Or here is another story, not to depart from the animal theme, which is so close to the Meme-token segment. November was an eventful month, and on November 6, 43 rhesus monkeys escaped from the Alpha Genesis research center. Internet users came up with various versions of the reasons for the escape, from poor nutrition and bloodthirsty scientists to conspiracy theories. The very next day, all monkey-related meme tokens went into overdrive. Especially MONKEY and Apes Go Bananas.
So meme coins and crypto market speculation are inseparable concepts. A timely release of a coin and the heating up of social networks — this is the strength and growth potential of any meme token.
Advantages of meme coins
- If invested in time, significant returns can be realized. meme coins are capable of explosive returns.
- Affordability and low barrier to entry. meme coins have a low cost and are widely available on exchanges and trading platforms.
- The positive impact of meme coins on public opinion of cryptocurrencies helps newcomers take their first steps in decentralized technology thanks to social support.
Risks of investing in meme coins
- High volatility.
- Lack of real value and practical use.
- Total or partial loss of invested funds.
What influences the price of meme coins
Despite all the apparent unpredictability, it is possible to distinguish several factors that affect the cost of meme coins:
- The initial popularity of the original meme or idea embedded in the coin. The culture of memes and their role in cryptocurrencies depends on how interesting the topic is to the community or opinion leaders.
- The scope and success of the marketing campaign. If the project team does not only count on the natural growth of the audience, but also provides a certain action plan for promotion, it predetermines the trend of meme coin value growth.
- Invite stars and opinion leaders. The participation of famous musicians, businessmen, athletes, politicians and other influencers significantly influences the attraction of investors. The greater the social influence of the invited person, the greater the jump in the price of meme coin.
- Existence of technological advantages. Innovative technological solutions can add value to the meme coin. For example, the transition to Layer2, which is currently being implemented by the PEPE meme token team, which ranks fourth in terms of capitalization in the segment. This upgrade will increase the speed of transactions and reduce their cost. Various technological trends in cryptocurrency can be implemented in meme coins, giving investors additional advantages in using or earning from the token.
The future of meme coins in cryptocurrency
It seems that meme coins and cryptocurrency culture are currently in a mutually beneficial interaction. On the one hand, the market has created a situation where there is a kind of crisis of ideas after the rapid wave of innovations that are now being introduced and developed. It is filled with narratives “out of thin air,” such as meme coins, the hype around which will sooner or later come to an end. Or, as Omid Malekan, a professor at Columbia Business School, put it, “meme coins are a form of economic populism” that can drag the market down with its ineffectiveness.
On the other hand, when analyzing how meme coins have changed the perception of cryptocurrencies and to what extent there is ideation in them, many experts agree that this class of crypto assets will thrive simply because “humanity will always want to buy something that is cheap and can grow in value”.
Thank you for your attention. Invest safely and profitably!
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