Memecoins
Is the “Memecoin supercycle” over? Mad Crypto Alpha with Ivan
My name is Ivan and welcome to my weekly Mad Crypto Alpha column.
Some people want to build “the future of finance”, but I just want to help you make money with crypto.
Every Sunday you receive weekly information that the news doesn’t cover but you need to know.
So you’re not only entertained by crypto, but you get the alpha behind the story.
Every time this happens, Crypto Twitter turns into “The Jerry Springer Show.” This week’s topic: Crypto VCs hate meme coins.
Exhibit A: Jack Niewoldangel investor.
HOT TAKE #2: Memecoins are horrible for the crypto industry.
Although memecoins make it harder to dump on small retail investors, they delegitimize the industry in general.
A huge cohort of crypto investors (myself included) are here for one reason: DeFi.
To the average retailer…
-Jack Niewold 🫡 (@JackNiewold) April 26, 2024 If you don’t read all that, here’s the TLDR: Niewold thinks coins delegitimize the industry, have no use cases, and don’t appeal to the “average retail investor.”
Exhibit B: Eddy Lazarintechnology director at a16zcryptoan important
Memecoins are changing the way the public, regulators, and entrepreneurs view crypto.
At best, it looks like a risky casino. Or a series of false promises masking a casino.
This profoundly affects adoption, regulation/laws and manufacturer behavior.
I see the damage every day. You should too.
– Eddy Lazzarin 🟠🔭 (@eddylazzarin) April 24, 2024
If you don’t know the industry well, you won’t know that what you see is not what you get.
What the VCs are saying: Meme coins are bad for crypto because they make the industry look like a casino, distract from, *checks quotes*, “mass-appealing projects” and alienate regulators.
What do VCs mean:No one buys our VC parts because
Meme coins are the most profitable narrative. Can the developers do anything?
What is really happening: Venture capital firms and the entire industry are to blame. Retail, that is, you, dear reader, has given up trying to understand zero knowledge, recovery, the real world, [insert latest crypto buzzwords].
Venture capitalists have no problem with coins even when they participate in them. See a16z booking benefits on Apecoin (CRYPTO: MONKEY). But as Hsakaone of the most knowledgeable cryptocurrency traders, puts it: venture capitalists created the monster they complain about with the predatory symbolism of their coins.
“They bit the hand that fed them, now the same hand dropped them off at the shelter and took in a friendlier dog.”
Where the VCs are right: The meme coin market is diluted and maturing.
Dogecoin used to be a “FU to the crypto bros shouting have fun staying poor”. Next generation meme coins are, like Qiao Wang the dish, more like white-collar sports betting, where you encourage your preferred narrative. And unlike sports, have at least a theoretical chance of asymmetric upside.
But unlike sports betting, no arbiter verifies insider attribution of new even trendy plays.
Additionally, much of the wealth in meme coins is imaginary and can only be cashed in if you are skilled at doing so:
How much of this memecoin bubble represents wealth?
The answer is much less than I expected: between the 4 biggest memes I can think of, the chain’s total liquidity doesn’t even add up to $100 million.
I know it’s not everything, but how much wealth will actually be created? 500 million dollars? Maybe?
A lot… pic.twitter.com/4g6xALsKPJ— Jack Niewold 🫡 (@JackNiewold) March 30, 2024
Many people will not have this skill. This means a lot of people will get hurt. And that means the government will get involved (even more).
So if there are more and more meme coins and it’s getting harder and harder to make a profit, is there anyone left to buy at this point?
Read also: Bitcoin rally sparks renewed interest in cryptocurrencies: should you invest in them now?
Is there no one left to buy our Meme coin bags?
It’s been a rough month for meme coins. Just look at the 30-day performance of the top five by market capitalization.
| Cryptocurrency | performance over 30 days |
| Dogecoin (CRYPTO: DOGE) | -30.3% |
| Shiba Inu (CRYPTO: SHIB) | -19.6% |
| Pepe (CRYPTO: PEPE) | -3.5% |
| dog hat (CRYPTO: Wireless) | -28.5% |
| Bonk (CRYPTO: BONK) | -2.0% |
Ouch.
As Kylea pseudonymous researcher, rightly so points out, memes are the business of consensus. And when everyone has bought, who is left to buy?
Meme coins aren’t the most egalitarian thing crypto has ever seen. As a trader, you must choose your dilution poison:
- Dilution of valuation: classic altcoins accompanied by massive token unlocks to pay the venture capitalists who fund them. The price is depressed by token sales.
- Dilution of supply: meme pieces that have no entry barrier to being created. Prices are depressed by endless competition.
MertCEO of Helius Laboratories, said – and he’s right – that memes aren’t the reason VCs aren’t funding what people actually want. Their risk aversion and poor incentives are the real reason. It is easier to justify the investment in the 100th blockchain compared to an ambitious new project.
But that doesn’t change anything, quoting Kyle again, “we can’t just ape with half a brain anymore.” We are (probably) not ahead, but also (probably) not behind in this cycle.
The medium to long term macroeconomic outlook is still positive for crypto, as we are in a situation last seen in the 1940s: the economy is stuck between accelerating public debt and reaccelerating debt. inflation.
The second stage of inflation has arrived, and Powell finds himself in a real conundrum:
– Raise rates further: interest costs soar by $1.1 billion and the debt spiral accelerates.
– Wait, let’s hope inflation calms: interest expenses as a % of GDP at the highest in 25 years and growing by 5.25%.
– Cut into… pic.twitter.com/6s4vUv9N6w— Dylan LeClair 🟠 (@DylanLeClair_) April 26, 2024
So, what will it be like with coin investing then – whether over or about to be back?
Supercycle Memecoin: is it so over or are we back?
AnsemTHE Solana (CRYPTO: GROUND) influencer you may remember its audience size which is evolving on the market, think there will be a “consolidation into proven winners”.
I tend to agree with this. Like I underlines on Twitter, many crypto bros are offering exorbitant coin valuations. But is there enough money for all these coins to reach multi-billion dollar valuations?
What kind of situation does the market have to be in for someone to look at a coin worth tens or hundreds of billions and say, “Yeah, that’s true, I think it’s going a lot higher, let “buy me here.”
But I think Bitcoin is structurally set up for another leg up in this race:
Okay with that.
Still little systemic risk in the crypto-economy
US fiscal debt is going nowhere
Idiocracy is accelerating
Technology still supports the economy
In the short term, maybe a crisis, in the long term everyone will want to go for long term investments in technology and sustainable assets.
Guess what, Bitcoin is both
– Ivan ─ Crypto, macro and geopolitics (@IvanCryptoSlav) April 25, 2024
In the long term, I see the combination of (geo)political instability, fragmentation, loss of trust, digitalization and demographic change pushing Bitcoin up and to the right. And even coins as an alternative to white-collar online sports betting.
TLDR: It’s not over, we’re about to come back, bear with us.
Wrap it all up
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gn
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