As someone who has been closely observing the cryptocurrency space for quite some time now, I find myself intrigued by the surge of memecoins and their impact on the market. From my perspective, they indeed bring a fresh wave of excitement, accessibility, and cultural relevance to the world of crypto, which is undeniably appealing, especially to newcomers.
In simple terms, meme coins like Dogecoin and Shiba Inu have been grabbing headlines due to their extreme price fluctuations and increasing impact within the world of digital currencies.
The interest in meme coins is increasing significantly, whereas the interest in Bitcoin on Google has reached its lowest point in a year. On a scale from 0 to 100, the current interest level for Bitcoin stands at 33, while that of meme coins is at an impressive 77.
Google Trends employs an index-based method to display search volumes rather than precise numbers. According to Carlos Guzman, research analyst at cryptocurrency market maker GSR, this implies that the data is presented comparatively, with the index value representing the highest search volume within the chosen timeframe.
Although Bitcoin’s search volume on Google outnumbers that of meme coins, it’s on a declining trend, while there’s an upward momentum for meme coins, with them grabbing headlines more frequently recently.
The marketing lead for memecoin PONKE told CryptoMoon that interest in memecoins is surging, as they offer “some different culture, fun and community.” PONKE’s spokesperson added:
“Memecoins provide a high-beta trade [volatile trade] to Bitcoin, with more aggressive ups and downs. While Bitcoin is seen as a store of value, memecoins tap into culture, making crypto more relatable.”
The evidence strongly indicates what’s currently trending. According to Step Finance data, more than 490,000 new tokens have been minted on the Solana network since mid-September, and Solana Floor recently reported a staggering 19,000 token launches in just one day.
The reason behind memecoins’ popularity
As a researcher delving into the realm of cryptocurrencies, I’ve come across varying perspectives regarding the surge in popularity of memecoins. Interestingly, Ryan Lee, the chief analyst at Bitget Research, recently shared with CryptoMoon that the notion of investing in Bitcoin (BTC) as a potential “life-altering event” has seemingly lost its appeal.
He said that at the end of 2022, Bitcoin was trading at $16,000 after the collapse of FTX, and investors who bought the dip have only seen a 4x return on their investment nearly two years later. Memecoins, on the other hand, have “offered the potential for 10x or even 100x returns.”
He added that this type of performance has caused a “widespread sensation around memecoins, leading to the notion that a crypto trader might have better odds of making money for a fortune by trading memecoins rather than by dealing with Bitcoin.”
“The chance of earning millions from memecoins is much lower than winning at a casino, but the allure of quick and unexpected wealth will always captivate the masses more than complex investment strategies that offer more reliability and reasonable returns.”
Jeffrey Hu, who leads investment research at HashKey Capital, pointed out that one reason for the rising trend of memecoins is due to platforms such as Pump.fun, which significantly reduce the hurdle in creating new tokens, making it easier for more people to join the token launch process.
Hu implied that market participants are gradually moving towards tokens that provide entertainment value, have viral appeal, and present quick profit chances, instead of depending on long-term foundational aspects.
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In the near future, he anticipates that the surge of meme coins will attract a larger number of individual investors to the crypto market, boosting trading activity and enhancing liquidity levels.
Over a longer period, he warned that their high volatility might lead to “potential instability” and “market division.
Can memecoins permanently change crypto?
It’s evident from the data that the increasing popularity of memecoins will have a significant effect, as memecoins are predicted to surpass Bitcoin in performance by the year 2024.
By examining MarketVector’s Meme Coin Index (MEMECOIN), which tracks the six largest memecoins and gives them a combined weight based on market capitalization, you can observe that these cryptocurrencies have almost doubled Bitcoin’s year-to-date performance. In contrast, Bitcoin has seen a 61.5% increase this year, while the MEMECOIN index has experienced a more significant rise of 127.3%.
A significant change suggests that attitudes among cryptocurrency investors may be evolving. As stated by a representative from PONKE, memecoins present an opportunity for investors to become involved in something more substantial and are adding a touch of cultural significance to the world of cryptocurrencies.
Memecoins serve as a means to make cryptocurrency more enjoyable and approachable for people in the immediate future. Over time, they are expected to contribute significantly to mainstreaming cryptocurrency by reaching out to new communities, thereby expanding the total number of users.
Lee concurred, stating that these tokens are “attractive, particularly for novice cryptocurrency users,” which has a “favorable effect on the market overall.” Even in times of market downturn, it’s “likely to rebound when any meme coin undergoes another tenfold increase.
Meanwhile, the unpredictable nature of memecoins might pose a substantial threat to the crypto market as institutional investors are increasingly showing interest in it. This heightened attention led to the introduction of spot Bitcoin ETFs this year, which has amassed over $20 billion in collective inflows.
According to Guzman, it’s only logical to anticipate an increase in memecoin popularity since it has recently become a widely discussed topic, and some of these coins have shown signs of increasing value.
Nevertheless, he added that the relative size of memecoin search volumes to those of Bitcoin shows that the rising interest is “occurring among a smaller crowd” and not directly changing the market.
“We do think the rising popularity of memecoins represents a shift among investors, but only among a relatively small segment — those prone towards speculation. “
As an analyst, I’ve noticed a shift in behavior among certain market players. They seem to have grown weary of the volatile price movements in altcoins and have instead opted for purely speculative assets. These assets lack any pretense of future utility or income streams.
While interest in memecoins can keep on growing, Guzman said that “the appetite to gamble” on them is limited; interest in these tokens isn’t sustainable.
The enthusiasm may dwindle, much like the hype around Non-Fungible Tokens (NFTs) in 2021, as investors might eventually grow weary of situations where there’s always a winner and a loser, with someone ultimately being stuck holding the responsibility.
Financial nihilism or community control?
The “gambling” mindset is frequently proposed as being connected to a broader economic pattern known as financial nihilism – an attitude characterized by indifference towards conventional financial wisdom and practices, such as risk management strategies.
According to Travis Kling, founder and CIO of Ikigai Asset Management, financial nihilism involves embracing larger risks as a means to move beyond one’s present financial situation towards a more secure or stable position.
Kling attributes the rise of financial skepticism or nihilism to contemporary monetary and fiscal policies, particularly central banks adjusting interest rates to combat rising inflation. According to HashKey Capital’s Hu, this financial nihilism could potentially contribute to current market trends, as the popularity of memecoins indicates that investors are increasingly drawn towards speculative opportunities rather than focusing on a coin’s fundamentals.
As a researcher, I found myself at odds with the marketing lead at PONKE. Instead of viewing memecoins as just a trend or fad, they perceived it as a means for “seizing control.” Memecoins enable individuals to commodify culture and utilize it as a currency, thus circumventing conventional corporate and media narratives.
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Kadan Stadelmann, the chief technology officer at Komodo’s blockchain platform, stated that a sense of financial skepticism is undoubtedly shaping the investment decisions of those who are dissatisfied with conventional markets and are drawn to the excitement or rapid returns offered by high-risk, speculative assets.
This mentality represents an “indifference towards future worth and immediacy” stemming from irritation and apprehension about investments that grow gradually, as inflation diminishes the real value of money.
To uncover the “long-lasting successes in cryptocurrency,” as suggested by Guzman, it might be beneficial to focus on long-term strategies and demonstrate patience. These enduring winners are likely to comprise a significant portion of the market value and will be those that offer tangible use cases and utility.
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2024-10-24 16:43