The Next Chapter For Memecoins

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23 Dec 2024

Still A Viable Opportunity?
Many memecoins have taken a heavy knock with the recent correction in the altcoin market. Altcoins are overly sensitive, especially since Bitcoin is just below $100K. Many investors believe that Memecoins have had their moment in the sun and are now too risky given the gains already seen in the market. However, memecoins will perform well for the remainder of the cycle. This is largely due to the Layer1 effect.
Altcoins, especially Layer1s such as Avalanche, BNB, and Cardano are yet to rally. Altcoins are still heavily undervalued with many trading modestly above their bear market lows. The potential upside for altcoins is significant. Memecoins respond more significantly than any other sector to the Layer1 effect. Once prominent Layer1s begin rallying, memecoins within these ecosystems will rally alongside them.
It’s important to remember that memecoins rally in multiples of the underlying Layer1. For example, BNB recently rallied almost 50% in 2 months. Vita Inu (VINU) rallied 900% in the same timeframe. I recently published an article addressing my future expectations regarding this particular memecoin, especially since I see a lot of similar dynamics in the price action as I did with BONK.
The Best Entry Point
It’s always advisable to look at entering a memecoin position after a significant correction. Memecoins are like leveraged instruments but without the risk of liquidation. That being said, memecoins can also lose 99% of their value which is the same outcome as a liquidation event. I often look for well-established memecoins with a track record of 6 to 12 months.
I have addressed numerous aspects and practices of effective memecoin investing. Capital deployment strategies are imperative when investing in memecoins. It’s important to modestly and securely build positions rather than simply going all in at once. Effective capital deployment strategies are crucial in participating in this sector. Undisciplined decisions can be costly.
The market has experienced a correction aligned with my expectations. If BTC were to conquer $100K, I suggested a rally to $110K or $120K in an extremely bullish scenario. BTC recently topped at almost $109K and corrected as low as $92K. That is a 15% correction and is in line with many of the recent corrections of the current cycle. Bitcoin could still retest those lows. However, investors should be on the lookout for fresh entry points.
Fantom/SONIC memecoins are in a beautiful zone for fresh accumulation. These are likely to experience a significant second wind once SONIC goes live. One might secure a lower entry. However, it’s important to view this opportunity as a medium-term play. In hindsight, any entry within the current range will be a viable decision. Deep corrections make good opportunities adding to medium-term positions.
I don’t advocate long-term memecoin positions. I consider memecoin investments as opportunities to generate capital for alternative long-term positions. This can be for blue chips or DeFi tokens having an income-generating capacity. Holding yield-generating assets is important, especially if you can acquire them during a market correction. Ideally, one sells a market top and then accumulates these coins in the heart of a correction.
The market is experiencing a typical stage of consolidation before moving higher. Even a correction to $80K would still be within an acceptable range compared to previous cycles. However, the 15% to 20% correction appears to be the new standard of the current cycle with extreme cases modestly higher. Once the market really gets going we might see BTC strike a classic 30% to 40% correction.

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Final Thoughts
As the price increases, so does the volatility. It’s important to keep that in mind. Newcomers are likely to get a little scared in such a scenario. However, that’s how it works. Big moves experience significant volatility. This is especially true with memecoins. Remember, memecoins are highly speculative and dangerous. These are merely my thoughts. DYOR and exercise caution, see you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.