Over the weekend, memecoin prices rose significantly as social buzz intensified and cryptocurrency investors' risk appetite increased. The concept of a “memecoin supercycle,” which holds that memecoins will lead the coming cryptocurrency bull run, has gained a lot of traction on X. Against this backdrop, crypto analyst Kai (@Kaiwen0x) published a widely circulated article explaining the continued appeal of meme coins as a viable investment option.
The Case for Memecoin in the 2025 Crypto Bull Run
Kai believes memecoins are poised to outperform the broader market by 2025, meaning owning a "curated basket of memecoins" could allow investors to outperform 99% of market participants. "Apart from Bitcoin and stablecoins, memecoins are the only category that has found clear product-market fit. They combine the best features of ICOs (capital formation) and NFTs (community building) to create a killer product: global, permissionless speculation," he said.
The analyst stressed that traditional crypto projects usually balance product development and token management, while memecoins focus only on the token itself. "Memecoins remove the product and make the token their entire business, and the value of the token comes from the attention it generates from its community," Kai explained. Citing data from crypto analyst @MustStopMurad, Kai pointed out that by 2024, of the top 300 tokens that outperform Bitcoin, 16 of the top 20 tokens will be memecoins.
Kai points to two major external factors that are crucial for memecoin to surge. First, macro liquidity and interest rates need to be favorable for the entire market: "The macro setup suggests higher liquidity and lower interest rates over the next 12 months. Memecoin acts as a leveraged beta to Bitcoin, allowing you to get the most upside in a risk-on environment," Kai explained.
Secondly, the analyst mentioned financial nihilism, a term popularized by Ikigai Investment CEO Travis Kling (@Travis_Kling). The theory suggests that the rise of financial nihilism and the “YOLO” mentality is attracting more participants to the speculative market.
Internally, memecoins have shown that they have clear product-market fit and benefit from the so-called Lindy effect — the idea that the future lifespan of certain technologies or ideas is proportional to their current age, suggesting that memecoins are here to stay. In addition, memecoins are particularly good at creating and maintaining a compelling narrative, a key aspect in a market driven by speculation and investor sentiment.
The Art of Choosing Memecoin
Kai delves into the strategy of selecting promising memecoins, stressing the importance of nuanced analysis:
Emotional resonance: "I'm looking for a meme that generates a strong emotional response. Is it funny, relevant, compelling, powerful, or memorable? The average retail investor is going to be the last marginal bidder for our magical internet currency, so you need to buy and hold a currency that resonates with them emotionally," Kai explains.
Simple Stock Symbols: Favor simple yet powerful stock symbols, ideally 3 to 5 letters in length, such as WIF, GIGA, and BULL.
Holder Growth: Monitor steady growth in the number of holders as an indicator of increasing adoption.
Wide distribution of tokens: Preference is given to widely distributed tokens to avoid centralization risks.
Resilience: Identify tokens that have experienced multiple large price drops and rebounded, indicating strong community support.
Active community participation: Look for an “army of active replies on X” which signals a vibrant and engaged community.
Exchange Listings: Please note that centralized exchange (CEX) listing announcements can have a significant impact on a token’s valuation.
Lack of Insiders: Be cautious of tokens with insider involvement (e.g. pre-sales or venture capital backing), which could lead to an uneven playing field.
Potential risks and ineffectiveness
Kai acknowledged that investing in memecoin is risky:
Macroeconomic regime changes: A sharp rebound in inflation or a reversal of monetary easing could invalidate the macroeconomic rationale for being long risky assets.
Special events: Events such as major exchange hacks, regulatory changes, or major market crashes could have a serious impact on memecoin.
US election results: “Counterintuitively, if Trump wins the election, memecoin may underperform in this cycle,” Kai speculated.
Emotional attachment: He warns against becoming too emotionally invested in any one community because it can cloud judgment. “Identity creates emotional bonds that cloud your judgment as an investor.”
However, the crypto analyst advises investors to remain vigilant and adaptable: “To avoid losses, we need to monitor the macro environment for any signs of regime change. We must also keep an eye out for idiosyncratic events that could invalidate the thesis for investing in any particular token.” Kai concluded: “Good luck, and for the love of your dog, don’t miss this (still) 100x opportunity midway.”
At press time, WIF is trading at $2.67.
