Memecoins
Memecoins posted huge gains on Monday
The meme leader is back, and so are the meme coins.
The market was all-in on memes on Monday and that helped the value of similar tokens Dogemoneta (DOGE 4.99%) e Pepper (PEPPER 11.63%), which they have little value other than the meme itself. The biggest catalyst was not the news from Wall Street, but rather the return of a popular one Reddit personality called Roaring Kitty, who brought forth the first, the stock market meme craze.
Over the past 24 hours, Dogecoin has been on a big move, up 5.1% as of 3 PM ET today. Pepe grew by 14.3%, dogwifthat jumped 3% and Good (CRYPTO:BONK) gained 3.1%. All of this happened while the majority of the cryptocurrency market was down.
The meme lives on
Memes, or culturally relevant images or concepts that spread wildly across the Internet, took over the market today after a single tweet from Roaring Kitty after three years of inactivity. Actions of actions like GameStop, AMCAND Herz skyrocketed without any news other than the tweet.
What makes this type of market reaction so effective is how quickly it spreads. When the stock market opened today, it was clear that everyone knew about Roaring Kitty because all the media had written about it.
In the cryptocurrency market, the meme trend of 2021 has never died and has probably gained momentum over the past three years. So it’s only natural that meme coins have been among the biggest boosters today.
When will the meme end?
The biggest question for investors is how long the move will last. Dogecoin was the big winner at the start of 2021, but lost over 90% of its value from the 2021 peak to the end of 2022.
Dogecoin price data of YCharts.
The same could be said for meme stocks that rebounded and then lost their gains.
The problem with investing in memes is that the meme will only last for a certain period because there are no fundamentals driving the movement. The prices of tokens like this are determined by the price the next buyer will pay, and if the meme loses momentum, that price can drop.
The best investment in a meme market
It may not be that exciting, but I think the best buys in this cryptocurrency market are assets that are building a technological improvement on the blockchain. I like the tokens Ethereum AND Solana which provide the currency for the blockchains on which businesses are built, and efficient ways to make financial transactions are also emerging.
Meme coins have not demonstrated the ability to build the kind of financial or development ecosystem to use as a medium of exchange for financial transactions, so they probably won’t turn a meme into a fundamental change.
I also believe that relatively weak economic indicators, such as higher inflation and interest rates and a weakening labor market, could create a difficult market for purely speculative assets in the future.
A few years ago, stimulus checks fueled rampant speculation in crypto and meme coins, but when the checks stopped, the tokens plummeted. I think a similar incident will happen again; we just don’t know when.
Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.