The digital asset market including meme coins has grown significantly in recent months, underlining its rapid growth over the past decade. Thanks to this advancement, digital assets are now attractive to retail traders and institutional investors alike.
Concepts like asset tokenization, stablecoins, decentralized finance, meme coins, and many others are changing existing narratives across many jurisdictions. Meme coins are one of the popular market segments in the crypto space that have caught the most attention.
Often created as internet jokes, meme coins are community-driven hype projects with almost no intrinsic value. Despite that, they are popular due to their swift response to market volatility.
Over the years, tokens Dogecoin, Shiba Inu, Pepe, Bonk, Mog Coin, and Fartcoin have showcased how these types of assets can fetch holders mouth-watering returns in a matter of a few hours. For instance, in October 2024, one trader turned a $3,000 investment in a Solana-based meme coin, Numogram (GNON).
However, like a two-edged sword, they are capable of dealing heavy losses to holders. While these tokens may appear as an attractive investment option due to their low entry prices and potential to explode, it is important for investors to approach them with caution.
The lack of inherent value is one major attribute of meme coins due to how they are built on hype and humor. This makes them come short to established digital assets that solve real-world issues.
Most of these tokens are worth nothing and they lack technological innovations. Without real use cases or noticeable demand, there are no key fundamentals to enhance their value.
Downsides of meme coins
In February 2025, the United States Securities and Exchange Commission (SEC) released a statement in response to the increasing popularity of meme coins. The SEC warned the federal securities laws does not protect those who invest in these types of tokens.
This implies that in case investors suffer some losses due to manipulation by their issuers, they may not be able to get reimbursement. Without oversight from regulators, investors are exposed to risks like rug pull as the developers may dump the project and flee without a trace.
While the crypto market is volatile, meme coins push it to the edge. Viral tweets, jokes, influencers’ endorsement, or trends can easily skyrocket their value but fall once the noise goes down. Therefore, they mostly suffer from low liquidity unlike established assets, empowering a few whales, developers, or early investors to manipulate prices.
Naive investors will continue to fall prey because meme coins still pull them with FOMO (Fear of Missing Out). Those who buy these tokens at the peak of their hype mostly end up with significant losses.
Additionally, they have dubious or poorly designed tokenomics. Some meme coins have their huge portion set aside for early contributors, leaving them in a good position to manipulate market price.
Similarly, most meme coins have huge supply usually around 3 trillion making it difficult for their price to hit a sustainable trajectory. Without a transparent economic model, it will be difficult for them to sustain value.
Parting words
Meme coins may continue to dominate price charts and generate huge buzz but they rarely offer sustainable returns. Beyond any reasonable doubt, their extreme volatility, pseudonymous developers, absence of a clear-cut roadmap, lack of utility, and vulnerability to manipulation are red flags for investors.
For those aiming to build a balanced crypto portfolio, meme coins are not good choices. Instead, serious investors should turn to cryptocurrencies that come with strong fundamentals, an innovative approach, and utility.
While they may offer swift astronomical gain, smart investors shouldn’t mistake them for reliable investment options. Don’t forget that discipline, research, and perseverance, not memes build a good portfolio.
It is advisable for investors to avoid most meme coins to protect themselves from unnecessary risks. Instead, they should channel their capital into digital assets with realistic long-term potential.
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