From mainstay canine coins like DOGE and FLOKI to the insanity of HarryPotterObamaSonic10Inu, we examine what makes some memecoins more popular than others
While memecoins might seem like a long shot, professional traders can always spot good trades among them, after all, they contribute significantly to the mass adoption of crypto assets, despite their perceived low intrinsic value.
There is a hint of resurgence according to FLOKI's core team member, B who spoke to us to further understand the role of memecoins in the overall crypto asset space.
In general, memecoin pumps spill over into the greater crypto ecosystem bringing more traders and volumes, and a resurgence of interest in memecoins demonstrates retail participation. After all, for most retail, there is little differentiation between memecoins and tokens with more established fundamentals, since all of them are just digital currencies to the untrained eye.
Widely-publicized memecoin pumps that attract the attention of retail traders have the power to spark bull markets. On the other hand, memecoin frenzies late in bull markets often signal market froth and may precipitate a broad market downturn.
Memecoins have more mainstream appeal
“Memecoins and community tokens tend to have more mainstream appeal because the average Joe can relate to them. As a result, several studies have shown that memecoins like DOGE and SHIB are more popular and recognized in most parts of the world than ETH and most blue chip cryptocurrencies, and even BTC sometimes,” Floki's core team member, B said.
“They are a sort of "people's cryptocurrency". They unite people, they are not a tool for hedge funds and VCs, and their success often depends on people coming together and rallying around them,” he noted.
For a quick comparison, when venture capital-backed SUI was launched, its price went down about 70% to $1.26 per token, from its record high of around $4, two days prior. At the same time, memecoin Pepe reached its current all-time high on the day of SUI’s launch, a rally representing a 6,879% rise from its initial listing price.
Resurgence in memecoins pump through institutions' interest in crypto
According to B, institutional investors' growing interest in crypto assets signals mainstream adoption.
“The sudden influx of institutional interest from the biggest TradFi names like BlackRock, Fidelity, and others has given the industry significant legitimacy. This will result in more mainstream coverage of crypto (and positive ones, too!) which will bring crypto front and center to a lot of retail,” he said, noting that “memecoins will play a pivotal role in getting these retail users to have their first crypto experience.”
Innovations and narratives can help memecoins stand out
With Elon Musk’s frequent bull-posting on social media, lots of interest in Dogecoin remains. It sits as the 8th largest cryptocurrency with a market cap of over $10 billion, and trade volumes that often break $1 billion per day globally. Still, the token has performed quite weakly, sitting at roughly the same price it was prior to the purchase of Twitter from Jack Dorsey.
B said while FLOKI is targeting the appeal of mainstream memecoins like Dogecoin and Shiba Inu, it also has a strong focus on utility and innovation, which is “a strong edge and makes clear that FLOKI is more than just a memecoin.”
“We are currently building one of the most innovative blockchain games in the industry, a PlayToEarn blockchain metaverse game named Valhalla, which features on-chain gaming interactions, upgradeable NFTs, and Open World functionality. We also have the most innovative crypto locker protocol in the space, a DeFi protocol named the FlokiFi Locker protocol,” he said.
How to make money from memecoins?
The fate of some memecoins might be brighter such as those utility memecoins, according to an article written by Rutgers Business School FinTech Professor Merav Ozair.
“These types of meme coins will most likely be the ones that last, since they merge the entertaining meme culture that drives their popularity, with the kind of real economic benefits that cryptocurrencies can offer,” Prof. Ozair said.
Perhaps the most important aspect is the ability to build a cohesive culture around memes themselves. PEPE, due to the viral nature of the cartoon frog, flooded social media with images and gifs during the height of its virality. More recently, HarryPotterObamaSonic10Inu, which trades under the ticker BITCOIN, skyrocketed into a top 300 marketcap with a barrage of memes that galvanized a community by being ridiculous to the point of nonsensical.
The biggest takeaway is that coins evoking emotions like amusement tend to outperform those that appeal to greed or quick money attempts - as evident by the failure of projects like PEPE2, a token down 87% in the last three weeks despite being listed on exchanges such as Bitget and KuCoin. Find a token that unites people through cuteness or light-heartedness, and you may find yourself with something that won't land you in the poorhouse.
The dangers of memecoin
For WOO X, the goal is not to endorse any one particular memecoin, but at the same time, we recognize that traders may see opportunity in trading them. As such, WOO X continues to onboard highly-select memecoins with the recent optimizations in WOO X infrastructure being made to allow a much more flexible listing strategy and further deepen the platform’s liquidity. In addition to $FLOKI, WOO X has also listed $PEPE alongside more mainstream memecoins such as $SHIB and $DOGE.
CoinGecko, an independent cryptocurrency data aggregator, published that memecoins are a very risky type of crypto because they are based on internet cultural references. “The price movement depends on whether the memecoins can stay relevant by driving hype,” it noted.
There are currently 179 meme coins being tracked on CoinGecko. As of May 4, 2023, three meme coins have made it into the top 100 crypto assets by market capitalization, namely Dogecoin, Shiba Inu, and Pepe.
Meanwhile, Thomas Kralow, the founder of University Grade Trading Education, told Decrypt that he would never recommend investing in memecoins, because they have nothing to support their price and once the sense of “hype dies out,” often leaving their value attached to lackluster utility.
“It’s not a very sound investment, it’s just gambling,” he said. “Those who invested in Pepe Coin were lucky that it picked up, while there [are] thousands of others that didn’t.”
Sounds like Thomas Kralow is probably not going to make it.
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