In recent years, Meme Coin has set off a craze in the cryptocurrency market, attracting the attention of a large number of young investors. According to the latest report of Binance Research, the market value of Meme Coin has almost tripled since 2022, approaching the historical peak in 2021. What is the appeal of Meme Coin? What are the risks and potential returns? This article will deeply analyze the reasons, risks and future challenges of the rise of Meme Coin, and explore the coexistence of Meme Coin and altcoin in the crypto market, providing readers with clear insights into market trends.
Reasons for the rapid growth of memecoin: global economic background
1. The increase in global money supply has increased investment risk appetite
In 2020, in response to the impact of the epidemic, central banks around the world significantly increased money supply, resulting in unprecedented global capital liquidity. As inflation climbed, much of the money flowed to traditional investment targets such as the US stock market and real estate. However, some of the money also entered the crypto market, especially mainstream cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), as well as high-risk, high-return investment products such as memecoin. Since 2022, the market value of memecoins has almost doubled as a percentage of the total cryptocurrency market value (excluding BTC, ETH and stablecoins), from 4% to 11% in 2024. However, this proportion is still lower than in 2021, when the market values of Dogecoin (DOGE) and Shiba Inu Coin (SHIB) soared to more than $80 billion and $39 billion, respectively.
2. Loss of trust in the current financial system
Faced with pressures such as soaring house prices, stagnant wage growth and high inflation, investors are gradually losing confidence in the traditional financial system. Memecoin, with its decentralization, openness, transparency and cultural connotations, has become a way for this group of people to explore new wealth growth opportunities.
Who is buying memecoin?
Main groups: Generation Z and Millennials
The report pointed out that the main buyers of meme coins are millennials and Generation Z, accounting for 94% of cryptocurrency buyers, aged between 18 and 40. Behind their purchase behavior is a kind of "financial nihilism", that is, they believe that traditional means can no longer guarantee financial freedom. The community culture, humorous connotations and speculative nature of meme coins make them more in line with the style and needs of the younger generation.
Memecoins are not only an asset, but also carry a sense of community and cultural resonance. Just like the GameStop incident in 2021, these memecoins can gather group consensus and become a symbol of financial protest and collective action. Young investors buy memecoins more based on their symbolic meaning rather than financial fundamentals, which is also one of their appeals.
Why buy Memecoin?
1. Fairness and transparency
The issuance model of meme coins usually emphasizes fairness and allows investors to participate equally in the open market. This transparency is in line with the decentralized nature of the crypto industry, allowing global investors to invest equally. In addition, since most meme coins are issued on the blockchain, their asset flows are transparent, allowing investors to better track the flow of funds and the distribution of coin holders.
2. Simple and easy-to-understand narrative and high growth
Memecoins have the appeal of Internet culture and are not constrained by the traditional financial system. The report also pointed out that 75% of memecoin projects were launched in 2024, and the growth rate of projects is also accelerating. For example, it took only 104 days for $WIF to reach a market value of $1 billion from its launch, while $DOGE took 8 years to reach a similar scale.
3. High risk, high reward
Memecoins are highly volatile and can bring significant short-term gains. For many young investors, the potential for growth in memecoins has become a major incentive to take the risk.
Potential risks of buying memecoins
1. Low survival rate
However, the meme coin market is highly risky. The report points out that 97% of meme coins have died out and the trading volume is close to zero, which means that most meme coins cannot survive for a long time. Although some meme coins have proven to stand the test of time, such as DOGE and SHIB, which have been popular for 10 and 4 years respectively, the survival rate of meme coins is still very low. Therefore, investing in meme coins is extremely risky and it is very easy to lose money due to market sentiment fluctuations.
2. Control risks
In addition, some memecoin communities have groups that push prices, through hype and publicity, to make prices rise rapidly in a short period of time. However, this operational risk also means that some investors may eventually become "takers" and use retail investors as exit liquidity. Investors should act with caution to avoid becoming victims of such operations.
3. Challenges of Lack of Technological Innovation to Industry Development
Although meme coins have brought in a large amount of capital inflow, they generally lack technological innovation. Unlike blockchain projects that promote technological progress, meme coins mainly rely on community sentiment and cultural trends. This lack of technology-driven phenomenon may affect the innovative development of the crypto industry in the long run, reduce the attractiveness of technical projects, and weaken support for the development of new technologies.
Altcoins and memecoins: coexistence in the crypto market
The report mentioned that altcoins and memecoins coexist in the cryptocurrency market. Altcoins usually have technological innovations and practical application scenarios, such as Ethereum supporting smart contracts and decentralized applications. Memecoins rely more on community power and market hype and lack substantial applications. The coexistence of the two reflects investors' different needs for technological innovation and community culture.
Future Outlook: The Development and Challenges of MemeCoin
The popularity of meme coins reflects the young generation's demand for fairness, transparency and accessibility, which has also become a revelation for some projects to design fair issuance and community building. However, the survival rate and long-term value of meme coins still need time to test. The report recommends that investors should be cautious about meme coins and avoid over-investment. Although the meme coin phenomenon provides important community operation experience, in the long run, the industry should pay more attention to technological innovation and practical application value.
