According to a report by Hannah Miao and Gunjan Banerji for The Wall Street Journal (WSJ), a unique group of traders, known as “degens,” has significantly impacted the stock and crypto markets in recent times. These traders, often amateur enthusiasts, embrace high-risk strategies that diverge from traditional investment methods. The term “degen” is a playful reference to “degenerate gamblers,” reflecting their bold and unconventional approach to trading.
The WSJ article says degends — predominantly composed of young men — are characterized by their daring bets and skepticism towards conventional investment wisdom. The degen culture thrives on online platforms, where traders share their adventures in buying obscure digital tokens, meme stocks, and speculative options. This movement is fueled by a desire for quick profits and a sense of belonging to a community driven by memes and jokes.
The WSJ report goes on to mention that one of the most notable examples of degen activity is the recent meme-stock mania, notably involving GameStop shares. Coordinated efforts by these internet traders can lead to dramatic asset price swings, with social media playing a pivotal role. In May, social media mentions of “degen” surged to over 370,000, a significant increase from the previous month, highlighting the growing influence of this trading style.
For many, degen trading offers a tantalizing promise of quick money. Daniel Moravec, a former professional poker player turned degen trader, believes that high-risk trades are more appealing than traditional lottery tickets. The pandemic accelerated the rise of day trading, with platforms like Robinhood simplifying the process and removing barriers like commissions and high investment thresholds.
Miao and Banerji also point out that degens are not deterred by the inherent risks. They trade a wide array of assets, from digital tokens with no real value to highly volatile options. Apparently, Robinhood’s introduction of 24-hour trading has further enabled degens to chase market momentum at all hours.
Keith Gill, known online as “Roaring Kitty” and “DeepFuckingValue,” is a financial analyst who gained prominence for his role in the GameStop stock surge in early 2021. By sharing his investment strategies and analyses on platforms like Reddit and YouTube, he played a key part in the “meme stock” movement, where retail investors significantly boosted the stock prices of companies like GameStop and AMC. His activities led to a congressional testimony and a portrayal in the 2023 film “Dumb Money”. His recent return to social media has reignited interest in GameStop and other meme stocks, causing notable market volatility.
The WSJ report notes that the degen phenomenon extends beyond stocks. Cryptocurrency trading volumes have reached record highs, with degens investing in meme coins created for online amusement. For example, Solana-powered memecoin Dogwifhat ($WIF) has seen a dramatic rise in value, exemplifying the speculative nature of degen trading.
Source: TradingView
Finally, the WSJ points out that despite the risks and criticisms, the degen movement continues to grow, driven by a sense of community and the pursuit of financial freedom. For many young investors, traditional financial strategies seem inadequate in the face of rising living costs and economic uncertainty. The degen ethos, while extremely risky, offers a glimmer of hope for those seeking to break free from financial constraints.
In a recent Forbes report, Sandy Carter discusses memecoins, a unique type of cryptocurrency that started as internet jokes. According to Carter, despite their humorous origins, meme coins like Dogecoin have shown substantial market performance, with top tokens yielding over 1,300% returns in 2024. Carter, COO of Unstoppable Domains, emphasizes the significance of utility and real-world applications for these coins. She says that, for example, Shiba Inu (SHIB) has partnered with Zama.ai to develop advanced encryption for financial technologies, setting new standards in both the crypto and traditional financial sectors.
Forbes attributes the success of meme coins partly to celebrity endorsements, such as Elon Musk’s support for Dogecoin. However, she points out that the true value of these coins lies in their real-world utility. She warns that not all meme coins have the same potential, and some should be viewed skeptically.
Carter highlights that for a meme coin to succeed, it must foster a large, engaged community. Floki, for instance, has evolved into a movement by supporting utility projects and NFTs, driving its market capitalization to over $2.5 billion. Forbes also notes that some robust meme coins are built on established blockchains, like Bonk on the Solana blockchain, benefiting from extensive ecosystem integrations.
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