Today, meme coins like Doge, Shiba Inu, and several others have recorded unprecedented growth in terms of adoption and popularity. These assets were initially designed as a joke and thus feature amusing or animated memes. However, due to the support of their various communities, they have now evolved into becoming multi-billionaire projects. Doge, for instance, is among the leading cryptocurrency at the moment, with a market cap of over $10 billion. Also, Shiba Inu has a market cap of $4 billion as of 2023. All these indicate that meme coins have witnessed substantial gains in the market.
However, despite the successes recorded by these assets in recent years, they are highly volatile and speculative in nature. This is because they are mostly driven by hype and social media trends. So, investors must understand that meme coins are primarily designed for fun rather than investment. Although these assets, have, in recent years, offered returns to their investors, they carry a higher level of risk than other cryptocurrencies. As a matter of fact, some of these meme coins serve as platforms for influential personalities in the industry to carry out pump-dump schemes.
Are meme coins still relevant?
After enjoying significant attention during the year, interest in meme coins is cooling down. The sudden turn of fortunes for an industry that enjoyed a massive influx of investment is quite surprising. However, the reason behind the twist isn’t far-reaching. Attention on these coins is slowing down because meme coins don’t have real-life use. Utility has always been a problem as they were crafted out of jokes and no real use case. Their unlimited supply has not in any way helped the situation. Most meme coins have an infinite supply with no mechanism or schedule to reduce their circulation.
Having too many supplies of a meme coin often reduces their value, making them very cheap to acquire. More so, their low value often attracts investors to acquire them with the hope of recouping their investment and even gaining more as the project grows. However, most investors are not usually lucky to benefit from such investment targets, as most meme coins often fail to grow in value on a long streak.
On the flip side, investors often acquire meme coins for a short-term investment position. Due to that, they mostly dump the tokens once they’ve got convincing gains on them. This investment practice often piles selling pressure on the coins, which in turn makes them more volatile. Also, the pressure usually affects their value, thereby keeping them from recording noticeable increases.
Additionally, most of these coins are driven by community efforts. Similarly, most community members have their interests split up into numerous tokens within and outside the meme coin space. Since the value of meme coins is mostly driven by short-term hype, the chances of keeping their value on a positive level for the long term are usually low. Consequently, making them have short life circles.
Conclusion
While the meme coin market is enjoying good attention of late, their longevity has been a topic of discussion among investors. They mostly pose good returns as the hype around them remains strong. Once this hype meltdown, they often collapse leaving investors that hoard them in regret.