The meme coins trading spike caused problems at crypto exchanges and extremely raised Bitcoin transaction fees. However, despite being warned against buying fads, some lucky crypto users made 5,000,000% profit on meme coins last weeks. What are meme coins, and how do they affect the market?
First, there was Dogecoin, a meme coin created in 2013 as a joke responding to Bitcoin's rising popularity. It was designed to be accessible to everyone and has an uncapped supply. Then there were all other meme coins counted over 500 tokens, according to CoinMarketCap.
Meme coins are cryptocurrency tokens that are based on memes. They usually have no utility and are used mainly for trading purposes. The coins are considered super-risky investment options and are typically compared to rug-a-pull scam schemes.
They are traded at a super-low price, experience high volatility and volume spikes over short periods, and are affected by social media buzz. When celebrities support meme coins, their values immediately skyrocket and directly drop once the social rumor dies down. That's why meme coins are also considered speculative assets.
As meme coins usually have uncapped or massive supply amounts, their value is low. DOGE miner earns many times less than BTC ones.
While cryptocurrencies mainly have burning mechanisms to cut the circulating supply and increase their value, meme coins don't use such mechanisms making supply grow and value decrease.
And the colossal con is the tokenomics and how coins are distributed. Coin creators often take advantage of anonymity by holding 100% of the supply. They launch their token and work on creating a buzz in social media to increase its value and then cash out their assets with profits. Another concern regarding meme coins is that they are held by a small group of people, resulting in their trading activity significantly affecting the coin's value, which goes against the concept of decentralization.
Despite significant cons, meme coins are community-driven tokens meaning great support among enthusiastic crypto users.
The accident that inspired us to prepare this text happened with the newly launched Pepecoin and meme coins designed on the Bitcoin network. Since 2021, when meme coins have rapidly grown caused by the COVID-19 pandemic crisis and fear among retail investors of taking inflation losses, this type of coins didn't experience such surges in trading volume.
This time Pepecoin (PEPE), launched in the middle of April 2023, provoked the meme spike. Once the token appeared on Uniswap, the most popular Ethereum-based decentralized exchange, an anonymous user bought 5.907 trillion of PEPE worth $263. By May 5, in only three weeks, the buyer made almost 5,000,000% profit, and Pepecoin gained $1 billion of market capitalization.
Other factors have also contributed to the surge of Pepecoin, not just the mentioned buyer. Crypto whales and entities bought the token shortly after it was listed and boomed the interest among retail investors towards Pepecoin and other recently issued meme coins. In a week, Wojak and PEEPO experienced a 600% increase, while Floki saw a significant 1400% surge, and BOB coin rose by 260%.
Currently, the trading volume and market capitalization of meme coins have returned to their previous levels and stabilized. As previously mentioned, meme coins are highly speculative and prone to volatility.
The most famous meme coin spikes are associated with Dogecoin and Elon Musk's tweets. Elon Musk is known as Dogecoin big fan, besides being a founder of Tesla and Space X and the current owner of Twitter social media. Every time he tweets or moves toward Dogecoin, the token's price immediately increases.
The last time the coin's value increased was when the Twitter logo was replaced with the DOGE logo. The token showed a short-period increase of 20%. When Musk tweeted, "One word: Doge," the token gained 700% raise.
Despite experiencing rapid surges, the token's value stabilizes quickly. Additionally, with constant support from Elon Musk, Dogecoin has become more than just a meme.
Widespread crypto community memes inspire meme coins.
As a cultural concept, memes help gather communities around a specific problem or topic and are clear for everyone, regardless of language or culture. And meme tokens accumulate strong communities and sometimes help to solve problems. For example, Baby Doge recently supported an event aimed at helping dogs in Central Park, New York.
As crypto assets, meme tokens are attractive because of their low price per coin, which a fraction of a USD cent can sometimes measure. It makes the tokens accessible for retail investors and allows them to purchase coins in thousands.
Being speculative and highly volatile, meme coins allow holders to make huge profits on the news.
At SpectroCoin, we offer only reliable and valued tokens. Considering the risks of meme tokens investing, we currently propose two long-standing meme coins - Dogecoin (DOGE) and Shiba Inu (SHIB), ranked as the top-15 cryptocurrencies by market capitalization.
SpectroCoin clients can buy and sell DOGE and SHIB and spend them worldwide with a crypto debit card.
We remind you to be aware and do your own research before investing.