What happened?

  • The Binance Research 'Meme Coin' report points out that many meme coin projects lack substantial technological foundations or innovative capabilities, and rely on internet trends and speculation to attract funding.

  • Millennials and Gen Z face issues such as stagnant wage growth and soaring housing prices, and are unable to find satisfaction from traditional investments, thus turning to high-risk, high-reward assets like meme coins.

  • Even though the meme coin market is filled with speculation, Binance Research believes that the meme coin phenomenon provides valuable insights, particularly in the two areas of community building and fair token distribution.

97% of meme coin projects fail or lose activity after launch

Binance Research recently released a 'Meme Coin' report, pointing out that among the numerous meme coins that have emerged between 2023 and 2024, 97% have already 'died', meaning their trading volume is almost zero, losing market vitality.

Additionally, many meme coin projects lack substantial technological foundations or innovative capabilities, relying mainly on internet trends and speculation to attract funding.

The report also explains that meme coin projects are often controlled by a group of investors manipulating prices, profiting through a 'Pump and Dump' model, which involves buying a large amount of a meme coin and promoting it through the internet or social media to create the illusion that the coin is about to 'skyrocket'. This kind of speculation often exploits the psychology of 'fear of missing out', attracting a large number of retail investors to follow. When the price reaches a certain high point, the controlling group starts to sell off in large quantities.

This kind of operation only promotes short-term profits, rather than achieving long-term technological breakthroughs or industrial development. The expansion of the meme coin market may also blur the external focus on the cryptocurrency industry, overlooking the true potential of blockchain technology in finance and other fields.

Meme coin investment wave triggered by economic pressure

The Binance Research report discusses the rise of meme coin investments, noting that the millennial and Gen Z generations face issues such as stagnant wage growth and soaring housing prices, and are unable to find satisfaction from traditional investments, thus turning to high-risk, high-reward assets like meme coins.

Especially after the COVID-19 pandemic, young investors' trust in the traditional financial system has gradually declined, making them more willing to explore 'niche' investment projects like meme coins in search of quick profit opportunities. However, because the vast majority of meme coins lack intrinsic value, investors should be aware of the significant risks that may exist before being attracted by the 'community feeling' of such tokens.

Besides making money, the report also points out that investing in meme coins symbolizes, to some extent, a stance against the 'traditional financial system', serving as a means of expressing one's position.

The community power and fairness of meme coins are worth learning from.

Binance Research explains that meme coins are like 'the tokenization of ideas and narratives', attracting investors who identify with a certain ideology or culture. Investing in meme coins is more about participating in a cultural or community movement rather than expecting concrete technological or business outcomes.

The meme coin craze also indicates a significant market demand for coins that are 'fairly issued and accessible to everyone'. Meme coins are typically issued in a decentralized manner, allowing all participants the opportunity to join and invest from the inception of the project. This mechanism allows retail investors to grow alongside the project team, gradually establishing a loyal and cohesive community.

Even though the meme coin market seems filled with speculation, Binance Research summarizes: "The meme coin phenomenon provides valuable insights, especially in terms of community building and fair token distribution. The rise of meme coins fully demonstrates the powerful ability of blockchain technology to connect individuals globally and establish natural communities."

Data sources: CryptoSlate, BeInCrypto

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