Meme coins are the current trend in the cryptocurrency industry. However, there are still many questions about their long-term viability.

Meme Coin: Next Big Coin or Liquidity Escape for the Clique?

Meme coin traders, hold your seats. According to a recent publication by Binance Research, 97% of meme coins are dead with trading volume approaching zero.

This reflects sentiment about the volatile nature of most meme coins. While they have high potential for outsized returns due to rapid growth and speculation, they remain a very risky asset class with a high risk of loss due to their heavy reliance on market sentiment and lack of fundamental valuation support.

Joshua Wong, the author of the study, said, "The emergence of memecoins is the result of a sophisticated ecosystem driven by technology, including cryptographically supported validators, distributed ledgers, decentralized applications, and wallet interfaces."

Wong added:

As we explore the humorous and quirky world of meme money, it is important to remember that without the technological advancements achieved in the past decade, the decentralized digital infrastructure that has brought life to the flora and fauna of meme money today would not exist.

Why do meme coins continue to grow despite clear risks? Meme coins reflect the sentiment of the average cryptocurrency trader, prioritizing financial gain while paying little attention to the benefits of blockchain technology. This can be seen in the market share meme coins currently hold.

When measured by the overall market capitalization of cryptocurrency excluding bitcoin (BTC), ethereum (ETH), and stablecoins, the total market valuation of meme coins has nearly tripled since 2022, increasing from 4% to 11% by 2024. However, it is important to note that this ratio is smaller than in 2021, when the market capitalization of DOGE and SHIB surged to over $80 billion and $39 billion, respectively.

Market participants are attracted to meme coins due to several characteristics such as fair launches, accessibility, reliability, and transparency, with various encoded ideas and stories appealing to different types of consumers.

In the long run, it is important for meme coins to develop and maintain special stories and concepts that attract a large enough user base, as this will be essential for the most prosperous meme coins.
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