While memecoin's growth has outpaced the rest of the market, the technology coin group is struggling to keep its price in a safe zone.
Will this cycle be different from previous cycles?
Memecoin or technology-coin? What is the optimal choice for your investment portfolio?
In this article, I will analyze many aspects of this issue.
Preamble
The cryptocurrency market has had strong growth since the end of last year, Bitcoin increased sharply from 35,000 to 73,000 USD after the Bitcoin Spot ETF event. Top coins such as Ethereum, Chainlink, and BNB have also had a significant recovery, especially Solana.
Besides the top famous coins, in the recent growth wave, we witnessed the breakthrough of the memecoin group. Continuously attracting attention and taking over the market with crazy growth, many memecoins increased hundreds or even thousands of times. Meanwhile, the group of technology coins is having a hard time keeping prices in a safe zone. And stories about the choice of memecoin or technology are rising again in the crypto investor community.
Obviously everyone's analysis, beliefs and strategies are different. Investors always have their own opinions and choices, so there will not be a general answer to the above question.
The following section is the author's personal perspective to lead to the answer to the question of memecoin and technology, which is worth investing in.
First of all, let's clarify what memecoin and coin technology are?
What is Memecoin?
Memecoins are coins created solely for entertainment purposes, usually inspired by memes, characters, animals, popular trends or anything entertaining.
Memecoin is often not associated with applicability or superior technology, instead, culture and a strong community will be a solid fulcrum for that memecoin.
It takes less than a minute to create a memecoin, so the number of projects in this group can reach millions and every day hundreds of new memecoins are created, however more than 99% of them will soon disappear. lost.
In this article, I will only mention the group of memecoins with stable capitalization and solid communities, $PEPE $DOGE $WIF are typical examples. .
What is a technology coin?
There is no exact definition of the technology coin group, but according to the opinion of the majority of the community, technology coins are a group of project coins with the purpose of focusing on applicability through technology platforms in the market. crypto school.
In the context of this article, I use the phrase technology coin to refer to coins belonging to newly launched projects, heavily high-tech, with a strong development team, and large investment from VCs, with massive whitepapers and technical documents, are a contrasting image to the memecoin group above.
Some outstanding projects include: $STRK $W $ALT $ENA.
The table below is the criteria to help you distinguish more clearly between these two groups.
In general, coin memes and technology have two almost opposite nuances in every aspect of comparison.
Growth performance
Growth performance is not the same for each project, in each group there are projects with good and bad performance. However, on a general level for projects according to the original definition, the memecoin group is outperforming the technology group.
The chart below is the performance of prominent token groups in the market in a Binance report in May 2024.
The memecoin group grew 331% year-over-year, while other groups barely achieved double-digit growth.
In the full version, we can see that besides the growth group, once-popular coin groups such as Dex, LSDFi, Oracles, Ordinals, GameFi, Wallet... are all having negative growth.
These things lead us to a famous story over the past time: low float, high fdv. This is a situation where projects labeled high technology, calling for a lot of capital from investment funds push up valuations while only putting into circulation a small initial supply and then gradually unlocking it over time.
Low float, high fdv creates a large amount of token inflation over time. If the project cannot create demand for the token after the listing event, the price decrease is inevitable.
Recently launched technology projects all have very low initial circulating supply. For example Staknet (7%), SAGA (9%), ENA (10%). The annual token emission rate of this group is about 12-30%.
Compared to previous cycles, the Marketcap/FDV ratio has been greatly reduced. An average of 41.2% in 2022 is only 12.3% in 2024. According to Binance's report, from now to 2030, more than 155 billion USD in token value will be unlocked.
When the rate of money flowing into the crypto market is lower than the rate of project creation, there will not be enough liquidity for everyone. The price that investment funds buy in early capital rounds is much cheaper than in community rounds. High valuations can create conditions for funds to always achieve profits in all market conditions, in Meanwhile, technology lovers may be facing losses if they buy after listing.
Above is a performance statistics table of tokens listed on Binance recently that I have collected. Most technology projects are in the red, in contrast to the strong growth of the memecoin group.
Most memecoins on Binance have seen strong growth compared to the previous accumulation period. $PEPE increased 28 times from marketcap 250 million to 7 billion USD, $DOGE, $SHIB, $FLOKI, $PEOPLE also grew 4, 8, 22 and 18 times respectively from the accumulation zone of the cycle.
Development potential
Frankly speaking, almost all retail investors come to the cryptocurrency market for the purpose of finding profits. Memes are the coin group that shows the most naked nature of this. Not hidden deep under many layers of cover such as technology, vision, application, etc., with memecoin it is simply a bullish belief based on emotions.
Of course, experience over the years has made investors more alert, even for memecoin. Trash meme groups can mostly only convince newcomers to enter the market, but the OGs and Whales all have their own set of certain criteria. In addition, with the support of on-chain testing tools, many poor quality projects have been eliminated, making memecoin somewhat healthier.
Continuing with the story of memecoin's rise in this cycle. In fact, the previous cycle of memecoin also played an important role in helping the crypto market “brand” through $DOGE, $SHIB. This season it is continuing to play that role with two projects that have attracted a lot of attention, $PEPE and WIF.
Compared to the technology group, memecoin is much more accessible to newcomers. For non-crypto users, even those who have been involved for a long time, researching hundreds of whitepaper pages and technology updates every day is extremely difficult. Memecoin brings them an entertaining and fun community, but also lacks market emotions with roller-coaster price models.
The community often tells each other about the money flow in the crypto market flowing from Bitcoin → Large cap → Lowcap → Meme but it seems that this cycle is different, it should be rearranged into Bitcoin & Memecoin → High-tech Coin → Low-tech coin.
This ease of access, or in other words, ease of activating greed, has probably been seen and thoroughly applied by the creators of ecosystems. Between last year and the beginning of this year, we had memecoin season on Ethereum, followed by meme season on Solana, then Base, TON, even the old ecosystem that seemed unable to have any tokens other than BTC and Bitcoin also had one. meme season is so brilliant that the network's gas fee continuously creates ATH.
As for the Solana network, it cannot be denied that memecoin has contributed greatly to helping this ecosystem return to the Layer 1 race after the collapse of FTX. Now people probably remember Solana more as an ecosystem for memecoins than an NFT or parallel blockchain ecosystem.
Thus, the fun culture, ease of access and strong greed activation mechanism are helping memecoin prevail over the group of technology coins. But saying that doesn't mean it will be the end of technology coins.
There is a saying "It takes a long time to know a good horse", in a short time frame there is not enough data to evaluate whether a good meme coin or a good technology coin is good.
Unlike the flower that blooms early and eventually fades, the reason projects in the technology coin group need to call for large capital and need high valuation is for the purpose of long-term development, serving the practical needs of users. Web3.
Remember, the cryptocurrency market was formed and developed based on technology. During the past 15 years of development, new trends were created from technological breakthroughs.
To achieve this development, ideas need investment. Angel Investors and VCs are the ones who give wings to this development. In the economy, each entity plays a role and is important. Benefits will be commensurate with the level of contribution, so you should not wonder why the price the investment funds buy is much lower than the community round. In addition to providing abundant finance, there is strategic consulting, communication support, and resource connection.
Ultimately, both memes and technology are contributing to the overall development of the cryptocurrency market in particular and the blockchain industry in general. While Bitcoin and memecoin create a compelling story that attracts public attention to help the market "brand", technology coins help the market move steadily.
Should I choose memecoin or technology? There is certainly no one-size-fits-all answer, it depends on each person's investment strategy.
From the author's personal point of view, why bother looking for the answer of having this and not that? Besides defensive categories like Bitcoin and Ethereum, you can also choose for yourself meme projects. and technology. It is also a way to help you closely follow the market and experience the market.
Epilogue
The above are the author's personal observations. Hopefully this article will help you gain more perspective during the research process.
The information in the article should not be considered investment advice!