While plenty of meme tokens keep surging since early 2024, they are still of little benefit, and their allegedly high fraudulent nature has cast doubts on their long-term sustainability.
These meme coins are soaring and Bitcoin does either…
Despite Bitcoin grabbing lots of attention this March, as well as hitting an all-time-high of $73,600, the memecoin sector now appears to be reaping profit the most among regular cryptocurrencies – it recorded the highest returns of over 1,300% on average across the top tokens by market cap.
Several memecoins have grown immensely popular over a short period of time due to recent listings – these include Book of Meme, Brett, and Cat in a Dogs World. They all made it to the top 10 largest meme tokens list by market value in just a few weeks. Such a burst of activity triggered a number of traders to multiply their not-so-sizable investments.
Say, one trader turned $13,000 into over $2M within a single hour by investing in the Donotfomoew (MOEW) token shortly after its initial DEX listing on April 3. As per reports, the investor first purchased ~500 million MOEWs for 4 ETHs (the latter of which were priced $3,225 at the time). So, they sold 111.65 million MOEW tokens for 99 ETH, worth around $328,000 at the time.
As another example, a trader spent $8,300 on Apu Apustaja (APU) token, accumulating billions of it to sell it later when the price climbed to a high of $0.0007907, thus bringing the total worth of their investment to nearly $6.5 million.
Does the surge of memecoins reflect investor sentiment?
Some market observers believe that the mass appeal of meme tokens indicates burning interest in decentralized technology and the crypto industry as a whole.
Shytoshi Kusama, the lead developer behind the world’s second-largest memecoin, Shiba Inu (SHIB), notes that the rising valuations display investors’ readiness for sweeping changes where DeFi is being put front of the digital mainstream. He says that the true power of memes will be their “impact on the real world.”
As for potential use cases, Kusama highlights that solutions like Shiba Inu’s fully homomorphic encryption platform with Zama.ai and its upcoming suite of payment technologies will prove that such meme-driven projects can offer the same longevity and utility while also remaining fully decentralized.
Indrajeet Roy, a co-founder of TradeX, the crypto predictions market, claims that the spike in memecoins is a strong indicator of the role narratives in consumer information processing, as well as marketing both play in the success of this booming asset class.
“Meme coins are particularly sensitive to sentiments and trends. The ongoing surge shows how communities with humor and content can create hype and lead to swings. Memecoins are becoming a gateway for the masses to the crypto world,” he added.
Is this just a passing craze?
A few memecoins may be of little use, but many seem to lose their sky-high estimates as rapidly as they’ve gained them, leading us to cast a doubt on the sustainability of the entire ecosystem.
Roy believes that since most meme tokens lack solid fundamentals or applications, their glory will last as long as the current intersection of internet/social media and crypto finance persists.
He also thinks that as the industry matures, with projects focusing more on utility, it could potentially merge with other crypto-driven domains such as GameFi.
“Memecoins can add utility to a lot of continuous prediction markets, for example, Trump token for a market on election for rewards, for trading brings a lot of utility around memecoins,” he says.
Michael Telera, ambassador for another memecoin, Solana-based Laika (LAIKA), points out that any hesitations regarding the continued sustainability of the memecoin sector can be addressed just by looking at the amount of investments poured into it over the last couple of years.
From his perspective, quotes will keep climbing as more and more people begin to grasp the one-of-a-kind technological and social advantage — such as their ease-of-use, application in financial systems and the potential to educate users about blockchain — all put forth by suich tokens. “We believe memecoins, especially the current boom, can help bring new blood into the industry through simple, understandable and accessible means,” Telera added.
Memecoins could face legal challenges
As the adoption of memecoins goes through, we may see new complexities, regulations, restrictions. This can make it more difficult to create new projects. Moreover, it may result in some temporary stagnation during the next period. But then, the market will enter a new stage of development.
The memecoin frenzy has also sparked debates about the crypto market’s maturity and integrity. A spokesperson for crypto exchange Bitrue noted that the unrestrained rise can distort the image of cryptocurrencies, potentially undermining their credibility and the broader adoption of blockchain technology.
Moreover, the recent proliferation of tokens featuring racist and homophobic implications has led some in the crypto community to urge for developer intervention, as well as for tighter regulations and oversight to ensure the industry maintains its integrity and fosters responsible innovation.
Therefore, as the memecoin phenomenon keeps evolving, it will be crucial for both financial watchdogs and industry players to balance the need for innovation with the imperative of protecting investors and preserving the reputation of the crypto ecosystem in general.
Conclusion
Such growth in popularity of memecoins reflects the enthusiasm for decentralized technologies and the cryptocurrency industry. What comes with this uptick, however, are new challenges, such as the need to strike a balance between innovation and regulatory compliance to protect traders and preserve the industry’s reputation. The widespread use of meme tokens also raises concerns about their influence on the cohesiveness of the market, as well as about the emergence of tokens while considering their negative aspects, all of which emphasizes the need for ensuring a responsible approach to the evolution of this segment. To wrap up, the development of memecoins requires thoughtful considerations on the part of all market players in order to create a sustainable and accountable ecosystem.