Memecoins, these cryptocurrencies inspired by Internet memes, have transformed into an unavoidable phenomenon in the world of crypto. Initially perceived as jokes with no future, tokens like DOGE or SHIB are today found in the top of the most capitalized cryptos. Among the first 20 tokens to have outperformed Bitcoin in 2024, 13 are memecoins. Are memecoins a simple speculative bet or a real community movement?
The memecoin revolution within the crypto ecosystem
Memecoins, these humorous cryptocurrencies inspired by memes from the Internetare taking an increasingly important place within the crypto ecosystem.
Indeed, at the time of writing these lines, we list no less than 8 memecoins among the top 100 most capitalized cryptocurrencies on the market.
The 8 memecoins that are part of the top 100 most capitalized cryptos
Dogecoin (DOGE), the original memecoin, has become, against all expectations, a true cultural reference in the crypto community. Reaching close to 16 billion market capitalizationthe latter is firmly anchored in the top 10 of the most capitalized cryptos, far surpassing many cryptos affiliated with projects β more serious Β».
Faced with this unprecedented success, a multitude of memecoins subsequently emerged. From the Shiba Inu (SHIB) to the Pepe (PEPE) to the dogwifhat (WIF) and the FLOKI, there is something for everyone. From the frog to the Japanese dog in all its forms, there is something for everyone.
Memecoins are regularly compared to casinos for their speculative aspect. Although the adage ” the house always wins Β» can also be verified through memecoins, certain stories of people who have made a fortune by acquiring memecoins, whether they are verified or not, make the most gullible dream and push them to FOMO, this fear of missing the train.
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Although making a fortune from memecoins is extremely rare, a slim chance of β make it Β» does indeed exist and fuels the fantasy, particularly among recent investors in cryptocurrencies.
Indeed, the prospect of multiplying your investment by 100 quickly in a cryptocurrency is much more attractive than just buying Bitcoin and arming yourself with patience.
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Memecoins, the new Eldorado of crypto?
Murad Mahmudov, a former Bitcoin maximalist turned memecoin maximalist, spoke at a conference during the TOKEN2049 crypto event held September 16-22 in Singapore.
His intervention, which subsequently went viral on the social networkaimed to defend the cause of a β hypercycle Β» memecoins. Muhad Mahmudov's argument began by highlighting the poor performance of most cryptocurrencies since the start of the year until September 10, 2024.
Indeed, we can see that most cryptocurrencies, in this period of time, recorded negative performances. Conversely, the memecoins shown in this table have all recorded positive and even exceptional performances for certain recent memecoins.
Moreover, only 43 tokens from the top 300 most capitalized cryptos outperformed Bitcoin in 2024. Among the first 20 tokens on this list, 13 are memecoins.
According to Muhad Mahmudov, this phenomenon could partially be explained by a production of tokens never before seen in the crypto ecosystem. Indeed, the emergence of the memecoin launchers Pump.Fun and Sun Pump on the Solana and Tron blockchains have facilitated and encouraged the creation of several hundred thousand memecoins since the start of 2024.
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Will memecoins dethrone altcoins?
Muhad Mahmudov supports his argument by pointing out practices that are regularly criticized by the crypto community. According to him, the practices of Ventures Capital (VC), or investment funds in French, would be largely to the disadvantage of the individual investorthe famous retail.
Pyramid of wealth extraction
Furthermore, according to Muhad Mahmudov, cryptos of β technology companies would have an artificially inflated price at launch so that VCs could still make a multiple of 100 once their lock-in period is over, even though the price of the crypto in question has already suffered a 90% loss.. Β»
Thus, individuals thinking of getting a good deal by investing in a cryptocurrency whose price has fallen compared to the launch would be harmed and would serve β exit liquidity Β» for early investors.
Even very recently, a maneuver by Celestia was strongly criticized by the crypto community. The latter announced that they had raised $100 million at the end of September, only 1 month before a very important token unlock, representing more than 80% of the project's market cap, i.e. more than 860 million dollars while writing these lines.
This maneuver could be described as abusive because this fundraising contributed to an appreciation of the TIA token from which VCs will benefit during the unlock.
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Through his arguments, Muhad Mahmudov contrasts the side β inequitable Β» of the launches of altcoins and on the contrary the side β fair Β» memecoins.
People are finally waking up to the idea that the token is the real product. The crypto industry is a token production industry masquerading as a software production industry.
Beyond the speculative aspect, one of the reasons for the rise of memecoins could be attributed to the community aspect. Muhad Mahmudov defends the thesis that holding memecoins is being part of a community, of something bigger than yourself.
He notably highlights the fact that the world population is becoming more and more secularized but that people still need to believe as in this post on stop trading and believe in something “.
Diamondhanded Believers will outperform all Traders.
Stop Trading and Believe in Something.
β Murad πΉπ§² (@MustStopMurad) October 9, 2024
Are we inevitably heading towards a memecoin hypercycle?
Although the arguments in favor of a memecoin hypercycle are numerous, the counter-arguments are just as numerous.
Indeed, some new memecoins have recorded exceptional performance since the start of the year, but an overwhelming majority of memecoins only had a fleeting existence and disappeared as quickly as they appeared.
Moreover, according to the data collected, 98.6% of tokens launched on Pump.fun never manage to land on Raydium, the main DEX of the Solana blockchain.
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In the past, many other narratives have offered exceptional performances… over a certain period of time. Decentralized finance (DeFi), NFTs, the Metaverse, etc. Furthermore, while it is true that previous narratives generally no longer offer the same performances from one cycle to another, Artificial Intelligence (AI) and Real World Asset (RWA) tokens haven't really had their moment yet.
Sun Pump, the memecoin launcher on the Tron blockchain, saw very strong activity upon its launch. However, the number of active addresses appears to have dropped drastically since their highest peak (ATH). After saving 73,000 active addresses on the day of August 21, these have regularly been between 3,000 and 6,000 per day since the beginning of October.
Daily active addresses on Sun Pump
After 1 month of strong activity on Sun Pump, the hype seems to be running out of steam on the Tron blockchain. On the Solana Pump.Fun launcher side, after a period of trough from mid-August to the end of September, the protocol's revenues returned to high levels, signaling significant activity.
However, caution should be exercised with these protocols.because according to a study published in August β only 41 of the 1.7 million memecoins launched on Pump.Fun maintained a market cap above $1 million for several weeks. Β»
Moreover, only 20% of traders on Pump.Fun are in profitleaving an overwhelming majority in losses.
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Thus, it will be interesting to follow the evolution of the place occupied by memecoins in the crypto ecosystem in the months to come. If the vision presented by Muhad Mahmudov during his speech at TOKEN2049 were to come true, then we could see a polarity between memecoins and utility/technology tokens. This will certainly open the way to many exciting ideological debates.
And you, what do you think? Share your thoughts on the subject with us!
Next week, Cryptoast Academy will analyze the FLOKI memecoin in the format β Token of the week “. The token of the week is a multi-sector analysis, due to its fundamental, technical and on-chain approach carried out in collaboration by 3 experts from Cryptoast Academy.
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