Meme Coins: A Passing Fad or Here to Stay?
Meme coins, which are digital assets based on internet memes, are considered to be digital assets with comical or animated memes that draw a large following of enthusiastic online traders and community members. They are highly volatile and are rarely used for much else besides hoping for massive returns. CoinMarketCap’s Meme Coin section consists of over 300 digital assets, but a vast majority of them are not traded actively and hold no intrinsic value. Among them, only Dogecoin, Shiba Inu, Dogelon Mars, and Baby Dogecoin have a daily trading volume of more than $1 million in the meme category.
Dogecoin has been one of the higher performers among meme coins, it is an open-source digital currency that was created in 2013 by Billy Markus and Jackson Palmer. It was forked from Litecoin and gained popularity due to its fun and friendly image, as well as its active online community. Shiba Inu is another meme coin that gained popularity due to its cute charm and the attention it received from personalities like Elon Musk and Vitalik Buterin.
Data retrieved on 22/5/2023.
In the past month, the meme coin frenzy took off again and we saw a surge in trade volume in decentralized exchange Uniswap. A meme coin named Pepe (PEPE), based on “pepe the frog” meme, has surged by an incredible amount since its launch on April 16. It has become one of the most researched coins on data platform Nansen and has been buzzing with interest on Uniswap. Binance then listed the newly-launched meme coin, PEPE, and Floki Inu. Trading for both tokens began in May, with both coins trading at less than a penny. PEPE’s market capitalization has topped at a whopping $1.6 billion since its launch.
Taking a closer look at PEPE, the largest holder owns more than $1 million worth of the token after initial purchase at a few hundred dollars worth of Ether. What’s more, the same wallet also holds more than a million in both Shiba Inu and Floki respectively. While data shows trading pools for PEPE on Uniswap holds less than $4 million in available liquidity at a point. This means when top holders sell, it will lead to a steep drop in prices, this scenario may have been reflected in the fall in prices following May 6.
Meme coins have gained significant popularity in the cryptocurrency world due to their fun and engaging image, as well as the potential for high returns, especially among crypto traders known as “degens,” who are willing to take significant risks on obscure tokens with little reputation. However, meme coins are also considered very risky, as they are based on internet cultural references, and their price movement depends on whether they can stay relevant by driving hype. While some personalities on Twitter are giving PEPE the support, digital asset veterans caution that meme coins have nothing to support their price once the hype dies out. Therefore, it is crucial for investors to conduct thorough research and analysis before investing in meme coins, and to avoid investing more than they can afford to lose.
Despite the risks, it is likely that we will see more meme tokens emerge in the future. As the digital asset market continues to grow and evolve, new tokens will be created to cater to the demand of investors and traders. Our mission at OAX Foundation is to drive innovation in the digital asset industry, and we have accomplished this by creating the Notifs app, a portfolio tracker for digital assets. With this app, investors can monitor token prices, including the latest meme coins, and receive alerts to stay informed of rapidly changing price movements. With features like real-time price updates and personalized alerts, an app like Notifs can help investors stay on top of the latest developments in the meme coin market. It’s important to note that even with such tools, investing in meme coins remains a high-risk activity, and investors should always exercise caution and conduct thorough research before making any investment decisions.
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