Memecoins – A Key Element & Proponent Of This Cycle

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8 Jun 2024

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Welcome To The Casino
It is often said that investing in Crypto is nothing more than gambling. I would however strongly disagree with that statement. Memecoins, on the other hand, are most definitely a gamble. This is an asset class within the Crypto space that is all too familiar with rug pulls and manipulation. For many, it’s safer to avoid memecoins. Larger gains can always be sought out within the micro-cap sector.
This is an approach I usually practice. However, I began researching memecoins more attentively in 2023 and as a result, identified several winners early on. As I mentioned in an article in 2023, having a memecoin to match every layer 1 project you are invested in is a good idea. All layer 1s that rally cause the memcoins within their ecosystem to go parabolic.
This is the layer 1 effect that I have spoken of and addressed many times in the past. It has multiple reactionary responses. However, memecoins carry the highest risk/reward ratio, creating the highest likelihood of enormous gains. Even though memecoins experienced a level of hype in the previous cycle. The current cycle has already produced several success stories, some within the Solana ecosystem.
Gaining Dominance
In the previous cycle, much of the attention fell on DOGE and SHIB. However, the current memecoin market is producing many investment opportunities, many of which are reaching significant market cap valuations. The memecoin market cap is almost $70 billion and close to Solana’s market cap. What is however important to realize is that many of the memecoins being created and traded are not included in this figure.
This figure is the accumulative valuation of all the memecoins listed on CoinGecko. It’s important to note that Dexscreener is home to a plentitude of unlisted memecoins and trades billions of dollars in volume every day. The abovementioned market cap is solely made up of the coins listed on CoinGecko. Another metric that reveals just how significant the memecoin market has become.
These stats are once again, taken from CoinGecko. The second largest Cryptocurrency by market cap, Ethereum has traded $16 billion in 24 hours. The memecoins listed on CoinGecko have traded $10 billion in the same period. This reveals just how relevant memecoins have become in the current cycle. With further upside in sight, one can only imagine the inflow of new memecoins.
Memecoin culture looks set to remain a predominant force in the current cycle and the years to come. Choosing to gain exposure to a handful of speculative memecoins is an idea. However, considering the risks involved, one should only allocate capital they are willing to lose. One of the best times to buy memecoins is after a heavy market correction.
Memecoins often provide excellent entries once the widespread Crypto market sheds a little blood. This is especially true of smaller projects. Many memecoins create great trading opportunities. In the screenshot below, ANALOS, an older Solana memecoin displays just that. Even when trading in a tight range, there is enormous potential. The range captured within the green box is approximately 30%, the chart being the 12-hour timeframe.

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These opportunities are amplified in a robust market. However, the volatility is heavy and often without warning. Sticking to the “rules of trading” is advisable, as it will offer some safety in an otherwise dangerous market.

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Final Thoughts
Memecoins are here to stay! They have found their place in and amongst the more serious projects such as layer 1s, DeFi, RWA, and AI-based projects. Despite the lack of actual utility and use cases, they have secured the interest of speculative investors and community-driven narratives. Not investing your entire portfolio in memecoins goes without saying. However, a speculative gamble here and there could eventually pay off. 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.