Since its inception, the crypto market has been full of volatility and innovation; however, in 2024, a new trend has emerged—the Memecoin-dominated 'super cycle'. This wave differs from past trends in DeFi, NFTs, or Restaking, as it does not focus on technology-driven or application scenarios but quickly captures investors' attention through sentiment, narratives, and short-term market momentum. As Murad stated in his 2024 Token 2049 conference speech, 'The essence of the crypto market is driven by speculation.' Below, we will analyze the driving factors, potential impacts, and risks of the Memecoin wave by exploring Murad's viewpoints to interpret the current state of the crypto market and its possible future directions.
1. The nature of the crypto market: The 'super cycle' of the token production industry
Murad pointed out in his PPT that the essence of the current crypto market is a 'token production industry', rather than a true technological innovation industry. In other words, the core of most crypto projects is no longer to provide actual technological breakthroughs or application scenarios, but to attract speculators through the issuance and distribution of tokens, thereby driving short-term price increases. In this 'super cycle', token issuance and circulation have become the hallmark of a crypto project's success, rather than the underlying technology or innovation.
The emergence of Memecoins is an extreme manifestation of this trend. Unlike traditional technology-driven projects, Memecoins do not require complex technologies or applications; they rely solely on simple narratives and market resonance. Investors are no longer concerned with the underlying technology or long-term economic models of projects, but are instead attracted by market sentiment and quick profit opportunities. The essence of this cycle lies in the dominance of market momentum and speculation, as the crypto market gradually shifts from being technology-driven to emotion-driven.
2. The proliferation of pseudo-innovation and the shift in market sentiment
Murad believes that the speculative nature of the current crypto market is not accidental, but a result of an excess of pseudo-innovative projects. In recent years, various crypto projects have emerged, but many of them lack real innovative value and are instead filled with various tricks and unfair phenomena, such as:
Complex and unsustainable economic models: Many projects rely on elaborate distribution schemes and complex economic incentives, attempting to maintain token prices through multi-layered 'nested' designs, but these models often struggle to be sustained in the long term.
Massive unlocking of tokens: Many projects are more inclined towards insiders and early investors in token distribution, making it difficult for ordinary investors to benefit from project growth, while insiders can quickly profit through unlocking mechanisms.
Smart contract traps and security vulnerabilities: As the complexity of smart contracts increases, various potential security risks arise, posing significant financial safety hazards for ordinary investors.
These factors have led to a decline in market trust, as investors gradually realize that many projects' high technical thresholds and complex economic models are not designed to protect user interests, but for the profit and speculation of insiders. Consequently, more and more people have lost confidence in these 'pseudo-innovations' and are seeking purely simple investment opportunities—this is a significant reason for the rise of Memecoins. Memecoins do not rely on complex economic models and do not require extensive technical development; they have become a new market hotspot in a simple resonant form.
3. The 'vampire attack' of Memecoins and the predicament of technology tokens
In analyzing the phenomenon of Memecoins, Murad introduced the concept of 'vampire attacks', indicating that Memecoins attract significant capital through extreme speculative behavior, undermining the market demand for other crypto projects, especially technology-based tokens. The rise of Memecoins indicates that the market is shifting toward shorter-term, purely speculative tendencies, while projects reliant on technological breakthroughs and practical applications are facing neglect.
Technology-based token projects usually require a long development time and stable technical support to realize their true value. However, compared to the quick returns brought by Memecoins, such long-term investments appear too slow and complex. As a result, a large amount of capital has flowed into Memecoins and other speculative tokens, further weakening the market foundation and influence of technology-based tokens. This phenomenon not only reduces market confidence in technology-driven projects but also causes the crypto market to deviate further from the original intention of technological innovation.
4. The explosive momentum and 'reflexivity' effect of Memecoins
The cyclical prosperity of Memecoins is inseparable from the support of market momentum and the 'reflexivity' effect. The reflexivity effect, which is a self-reinforcing cycle of market prices and participant behavior, is the driving force behind the soaring prices of Memecoins. Murad explained that the early price increases in the market attracted more investors, further driving up prices and forming a self-fulfilling trend. This phenomenon is particularly evident in the Memecoin market.
In the market cycle of Memecoins, some 'get-rich-quick' stories have rapidly spread, and these simple narratives resonate with investors, bringing about massive market momentum. As prices rise, more and more investors are attracted in hopes of replicating past successes, and this market sentiment peaks in the latter stages of the cycle. However, once the momentum fades, market sentiment reverses, and prices can quickly decline. Murad believes that this extreme market momentum brings short-term prosperity, but serious risks lurk behind it.
5. The macro social trends driving demand for Memecoins
Murad not only focuses on the internal structure of the crypto market but also explores the reasons for the growing demand for Memecoins from a macro social perspective. He believes that current socio-economic trends provide fertile ground for the rise of Memecoins, including:
Rising living costs: The increase in housing prices, food prices, and basic living expenses makes it difficult for ordinary people to accumulate wealth in the traditional financial system, and the crypto market offers a high-return alternative.
Increased occupational uncertainty: With the rapid development of AI and automation, people's sense of security in traditional professions is declining, and more individuals are looking to high-risk, high-reward investments to secure their economic future.
Worsening wealth inequality: The widening gap between the rich and poor has led more people to hope to achieve the 'get-rich-quick dream' through cryptocurrency investments, and the rapid rise of Memecoins aligns with this demand.
Social loneliness and psychological needs: The fast pace of modern society has increased social alienation among individuals, and Memecoins not only provide opportunities for economic returns but also bring a new sense of belonging through community interaction.
These social trends collectively drive the demand for Memecoins in the crypto market, making them market hotspots in a short time.
6. The risks behind the Memecoin wave: The hidden dangers of a speculation-driven 'super cycle'
Although the rise of Memecoins has brought short-term market prosperity, Murad warns that this speculation-driven super cycle hides significant risks. The price increases of Memecoins rely on market momentum rather than the technical or application value of the projects. Once market sentiment reverses or momentum fades, the rapid decline in prices can lead to severe losses for investors. Furthermore, the prosperity of Memecoins may result in many new investors suffering losses during market downturns, thereby affecting the healthy development of the entire market.
Murad believes that for the crypto market to achieve true sustainable development, it must return to rationality, reduce dependence on speculation, and focus more on technological innovation and community building. He emphasizes that those projects that can still stand tall after the Memecoin tide recedes will be the ones that genuinely create long-term value, rather than relying on emotions and market momentum for short-term hype.
7. Future thoughts: Returning to long-term value and community building
In the face of the 'super cycle' of Memecoins, Murad calls for the crypto market to reassess its structure and core values. He believes that the future development of the crypto industry should focus more on technological innovation, transparent token distribution mechanisms, and community building. Project teams should abandon the practice of solely relying on market momentum and return to empowering users and realizing long-term value.
In this new cycle, community will become the key to project success, rather than just a tool for short-term speculation. Only those projects that truly balance wealth distribution and empower communities will survive and thrive in future markets.
Conclusion
The cyclical waves of Memecoins reflect the speculative tendencies of the crypto market and reveal the deep structural issues within it. Murad's analysis provides us with a calm perspective, allowing us to see the risks and challenges behind the speculation-driven super cycle. As market sentiment fluctuates, the crypto industry needs to gradually move away from reliance on speculation in the 'super cycle'.
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