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Memecoin Mania: Is it Here to Stay or Should You Avoid?

Lincoln Murr

Summary: Even though this recent bull market felt like it would be led by Bitcoin, an unlikely category of coins has led the charge: meme coins. Indeed, every day, there seems to be a new random coin on Twitter that made millionaires overnight, and hundreds of thousands of coins have been created in the past few ...

Even though this recent bull market felt like it would be led by Bitcoin, an unlikely category of coins has led the charge: meme coins. Indeed, every day, there seems to be a new random coin on Twitter that made millionaires overnight, and hundreds of thousands of coins have been created in the past few weeks alone. Let’s explore this phenomenon, some notable events, and whether it’s worth “investing.”

Memecoins are an interesting category of cryptocurrencies that derive value from people investing in them and forming a community around the theme or idea evoked from their branding. Dogecoin is the original memecoin and has fostered a community around its branding and silliness – so much so that it has become a favorite cryptocurrency of Elon Musk, primarily because he believes “the most entertaining outcome is the most likely.” Since Dogecoin, hundreds of thousands of meme coins have been deployed on Ethereum, Layer 2s, and Solana, all trying to capture this mind share and make millionaires overnight.

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The past couple of weeks have been completely dominated by stories and events related to meme coins. For example, one of the bigger meme coins early on in this cycle was Jeo Boden, an intentionally misspelled and memed version of Joe Biden. Its success spawned numerous copycats, including Elizabath Whoren, Keem Kong Un, and others. 

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After the typical pattern of memecoins, where a founder would release the project to the community via DEX listing, became stale, a new strategy developed: presales. With this, a founder would post a Solana address to send money to and give tokens upon the coin's release. This became an instant hit, as it allowed users to accumulate a large number of tokens at the lowest point possible. The best example is BOME, or Book of Meme, which achieved a market capitalization of over $1.5 billion almost immediately after release. Other notable projects following this strategy include $NAP, which hit a $250 million market capitalization in two hours. Interestingly, the founder of $NAP is a novice in the crypto space and had very little to offer other than his Tweet, which subsequently blew up.

Of course, these few cases make up the vast minority of what happens in the memecoin space. Most of the time, projects never get off the ground, their founders rugpull and scam everyone, or it fails to get any sort of attention. During this cycle, there have been a few scams that are so elaborate and notable that they must be discussed. For example, YE, named after rapper Kanye West, was a token that appeared on Solana and was one of only two accounts that the rapper followed on Instagram. However, what actually happened was that the person Kanye followed was hacked, their account was turned into YE coin, and the developers stole money from thousands of YE holders.

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Another interesting story is SLERF, a coin with a presale from March 17th that raised $10 million. Unfortunately, the developer accidentally burned all of the tokens that were supposed to go to presale backers, which somehow made the coin even more popular and helped it reach a high of $1.4 from a starting price of 3 cents in two hours. It has over $2 billion in trading volume, with 100,000 unique traders at the time of writing. Whether this was a calculated marketing move or an inept developer remains unknown.

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Even though it may seem like everyone on Twitter is making money on memecoins, the reality is that 99% of people lose money, and only the 1% who make life-changing profits on one-in-a-million trades post about it and get attention. Investing in memecoins is more akin to gambling, and should be treated as such. Even though memecoins are experiencing the most attention they’ve ever seen, momentum seems to be slowing down, and the market will resume acting rationally eventually, and many will be left holding the bags.

By Lincoln Murr

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