Memecoins
more than just a trend, it’s a phenomenon — Retail Technology Innovation Hub
The history of memecoins
The most famous example of memecoins is the early cryptocurrency Dogecoin, inspired by Elon Musk’s favorite meme featuring a Shiba Inu dog and created as a parody of Bitcoin.
The project was launched in December 2013, technically inspired by Litecoin. The coin saw significant growth during its 2017 bull run, driven by the ICO craze, but it faced a slowdown in 2018.
Despite these hesitations and the humorous image, Dogecoin maintains a dedicated community heavily influenced by Elon Musk. The Tesla CEO supported Dogecoin as the expected payment method due to its low transaction costs. Each time the coin was mentioned on his account, the price increased.
The Dogecoin affair inspired other creators to develop cryptocurrencies with similar “dog” branding like Shiba Inu. Launched in 2020, the “Dogecoin killer” quickly grew to become the second largest coin, with a market capitalization of approximately $6.5 billion, making it the 14th largest crypto -currency in total.
During the 2021 bull run, memecoins kept pace with traditional cryptocurrencies and also showed an increase in price and capitalization. This sparked many new meme projects. Thanks to the promotion of communities on social networks, the tokens quickly gained popularity.
The price escalation mode of meme coins, based on community and celebrity support, continues to move assets to the top. Dogecoin, for example, gained media attention when Elon Musk briefly replaced the X logo with the Dogecoin mascot. Guess what happened to the room next?
The KITTY meme coin, named after streamer Keith Gill known as Roaring Kitty, soared in value more than 100 times after Gill made his first appearance on social media in three years. Gill’s X post was the first post on her account since June 2021 and garnered over eight million views in a matter of hours.
What sets memecoins apart?
So, what distinguishes meme cryptocurrencies from others, let’s summarize and highlight the main features:
1. Community and cultural movement: Memecoins are often inspired by Internet memes and are known for their enthusiastic and active online communities. These communities play a crucial role in promoting and introducing the coins, and even increasing their market value.
2. High volatility and speculation. Due to their nature, community memecoins can experience extreme volatility. Their prices can skyrocket thanks to celebrity endorsements or viral Internet campaigns, but they can also collapse just as quickly. This makes it a high-risk investment.
3. Limited utility outside of commerce: Unlike more established cryptocurrencies, many memecoins have no intrinsic utility or broader application beyond their use as a speculative trading vehicle.
4. Influence of personalities: The value and popularity of meme coins can be heavily influenced by public figures and celebrities. For example, tokens such as Dogelon Mars and Floki Inu have benefited from associations with Elon Musk.
Risks and rewards of investing in memecoins
Investing in meme coins can be profitable but also extremely risky. The success of such investments largely depends on the timing of market entry and exit:
● Short-term speculation: Some traders attempt to capitalize on the volatility of meme coins by buying them at low prices and reselling them when values skyrocket on hype.
● Long-term investments: Long-term storage carries great risks, as many of these coins can lose their value or become completely useless over time.
Meme coins are very volatile and their price sometimes increases sharply, but it is often not for long. Traditionally, assets feel good in a bull market, when small investors are in principle favorably disposed towards crypto assets.
And given that the initial capitalization of memecoins, especially new coins, is relatively small, it can be “pumped” infinitely.
Notable Memecoins in the Market
FLOKI (Floki Inu)
The token joins the memecoin lineup, directly referencing the broader Dogecoin phenomenon and its most famous advocate, Elon Musk. This piece is named after her dog, Floki. It quickly became popular with investors looking for the next big memecoin after the success of Dogecoin.
Growing from memes, Floki has grown into a full Web3 company, expanding its reach into decentralized finance (DeFi), non-swappable tokens (NFTs), and most recently creating its Valhalla metaverse.
This breadth of application has earned it the nickname “popular cryptocurrency” among its supporters.
Bonk (BONK)
Bonk is the first “dog” memecoin created on Solana. Exactly half of the initial emission in the form of airdrop was transferred to the community of this ecosystem.
This was done to support the Solana ecosystem after the abrupt collapse of SOL. Indeed, the emergence of BONK has caused activity in the ecosystem: the release of new meme tokens, shares with hot coins, the creation of NFT collections, etc.
Over the past six months, the price of this cryptocurrency has increased by several thousand percent, largely due to the integration of the token into the Saga smartphone from developers Solana, the owners of which could benefit from free distribution BONK tokens.
dog hat (WIF)
Another Shiba Inu dog. The creators never claimed serious coin status and even insisted that the name of this cryptocurrency should always be written with a small letter. WIF became one of the top altcoins in terms of growth in March, with its price increasing by almost 400%.
The growth was largely facilitated by the addition of a token to the leading US brokerage platform Robinhood. The capitalization of the project is $2.7 billion (as of March 2024);
In late February, analytics platform Lokonchain reported on a trader who had made almost $1 million on WIF. In November 2023, he purchased 2.58 million WIF for $310 in the Solana cryptocurrency.
On February 27, the price of WIF rose to $0.57 and the value of the trader’s coins reached around $1.4 million. Thus, his return on investment in the WIF token was 4500%.
PEPE
Not united dogs 🙂 This memecoin is based on the popular internet meme “Pepe the Frog”. Like most memecoins, PEPE is primarily designed to entertain and express cultural trends.
Today on the largest crypto exchange Pepe is wearing a red cap, guess who this refers to? Tip: Starts at T and ends at the ramp. Therefore, Pepe’s price could potentially soar on the news, if suddenly Trump becomes President of the United States.
Conclusion
To summarize, we can say that memecoins are an integral part of the crypto market, a “positive” phenomenon. Yes, there is no serious concept or technology, but this risky asset undoubtedly contributes to the adoption of cryptocurrencies.