Memecoin is always a popular topic in the market with high profits x100 or even thousands of times in just a short time. However, choosing a Meme coin to buy and hold in a bear market is not a wise choice. So why do I say that? Let’s find out in this article.
Before jumping into the article, you can read some of the following projects to better understand
- What is Memecoin (MEME)? Overview of Memecoin cryptocurrency
- The Role of Memes in the Crypto Market
Memecoin Overview
Memecoin is a term used to refer to coins created or linked to popular images, messages or meme content on the internet. True to common meme style, these coins are often created as a form of entertainment and often have no practical use.
The first memecoin to appear on the market was DogeCoin, released in 2013 after software engineers created it as a joke. However, at that time, this Memecoin coin did not really become popular until Elon Musk publicly supported this Memecoin coin. Since that time, the Memecoin trend also began to form and spread in the market with the appearance of a series of other famous names including: Shiba Inu token, PepeCoin,…
Source of Value of Meme Tokens
A meme is often known as a short, humorous message that is widely spread on the Internet. Memes come in many different forms, but we commonly know them as images. With inspiration from memes, many popular Memecoin projects on the market also often take advantage of meme IPs outside the cryptocurrency world such as Shiba Inu with images of Shiba dogs, Pepe taking advantage of images of Pepe the Frog,… In addition to famous images and popular culture, some widely accepted opinions can also become the source of Memes.
LTC was once considered digital silver
Unlike other projects in the Crypto market such as DeFi, GameFi or SocialFi, Memecoin projects often do not have a business model and are called a PMF (Product Market Fit) – Product suitable for user needs.
This is shown very clearly in the Crypto market. No matter what role you participate in the cryptocurrency market, it cannot be denied that “speculation and making money” is an important driving force in the cryptocurrency market. The cryptocurrency world and Memecoin projects are the PMF that meets those needs.
One point that creates unique value for Meme tokens compared to regular Web3 projects comes from the intrinsic value growth that comes entirely from the attention of future speculators and capital flows from speculation. flows in continuously. This also means that the main task of the moderators of Memecoin projects will be to attract and tease the attention of the community and try to promote the spread of fomo emotions.
The Evolution of a Memecoin
The development process of a Memecoin project has clear stages as follows:
- Story formation and design: Because Memecoin projects often do not have a practical product at the beginning of the project. Therefore, forming a story around it is extremely important and from there it can easily create a fomo mentality for other investors. For example, the story of Shiba Inu revolves around Vitalik or DogeCoin revolves around Elon Musk. Creating a story around something or a famous KOL will help the meme token become more accessible to the majority of users in the market.
- Early stage: This is the stage where very few people know about the project and attracting influencers during this stage is extremely important to determine the success or failure of the project.
- Shaping and expanding fomo: The story of getting rich for early participants is widely spread. We will see stories told on social networks like spending 1,000 USD to buy Shiba and now he has 1M USD. These stories will stimulate greed and attract many others to this memecoin and people have faith that the price will continue to grow in the near future.
- Popular in large scale: This is called the peak fomo period when these Memecoin tokens will be listed on leading exchanges such as Binance, Coinbase,… and accompanied by a period of rapid growth of the tokens.
- Maintain attractiveness: This is the period when Memecoins have become extremely popular and the project will have activities to maintain attention from users.
This is called a complete development process of a Memecoin. However, not all projects develop to the final stage, most of them die in the early stages. In this article, I only mention “Bluechip Memes” that have stories surrounding them and have created success in the past to discuss and draw lessons.
Memecoin Is Not a Wise Choice for Long-Term Holding
As mentioned earlier, Memecoin projects operate on community attention but shifts in community attention are inevitable. Furthermore with its low initial creation cost, it means that Memecoin now faces a multitude of follow-on projects vying for the attention and resources of speculators.
Take the Shiba Inu as a prime example, it started as a Memecoin during a bull market. Shiba Inu has attracted the attention of users through a very interesting and novel form of Marketing: Airdrop of 50% of the tokens to Vitalik. The story revolves around Vitalik helping Shiba Inu become a very successful Memecoin on the market at that time.
But at the present time, the token price has divided by 10 compared to the peak reached at the end of 2021. During the entire year of 2023 recovery, the recovery of Shiba tokens is also very low compared to other coins on the market. such as: Bitcoin and Ethereum. Or if we compare attention, certainly Shiba at the present time does not receive much attention compared to new Memecoins such as: Pepe, Bonk,…
Compare price trends between Shiba tokens and BTC in the last 1 year
After landing on famous Cex exchanges and receiving so much attention, its ability to attract has gradually decreased, this is inevitable. Although the Shiba project team has frequently made moves including building its own Dex, building its own L2, releasing NFTs, developing metaverse and games, …, trying to transition from a pure Memecoin to a business-oriented project with real products. However, all construction efforts up to now have brought disappointment, DEX Shibaswap only has a TVL of 21M USD and Shiba token price is also contrary to the upward trend of BTC.
From here we can see that turning a Memecoin project into a project with a real product is not easy, on the one hand because it requires clear strategies in creating products and on the other hand it goes against the grain. back to the original Meme style. From there, it further reduces the appeal that Memecoin brings.
In addition, another thing that I see in Memecoin projects is that the development team also has no motivation to maintain the project long term. The success of the new generations of Memecoins is not just a coincidence and has largely been planned and driven by the strength of the team behind it. Much of this power comes from the collusion of many forces. In addition to the necessary capital and resources, the support of KOLs at the right time is needed.
However, after a Memecoin project is successful, the price to maintain its popularity becomes increasingly high and it would be smarter for the team to use the money earned from this Memecoin to create another Memecoin. Newer, has a more attractive story and certainly higher profitability. Because the core team of most Memecoin projects on the market at the moment are anonymous, their leaving or staying will be less burdensome than other projects on the market.
summary
From here we can see that if people choose Memecoin projects like Shiba Inu or Dogecoin to buy in the bear market, they may not have reached shore yet. Even when the Meme trend emerged with ORDI or Pepe, these coins did not respond and increased in price according to this trend. Above is all the information that I want to introduce in this article, hope everyone has received useful knowledge.
