Let’s break down why it’s challenging to become rich from meme coins like Dogecoin (DOGE) and Pepe Coin (PEPE) using some basic math:
1. Small Capital Investment Challenge
Many investors start with a small amount, say $500. For this to make you a millionaire:
• Required Return = $1,000,000 / $500 = 2,000x
Achieving a 2,000x return is extremely rare in financial markets, even in highly speculative assets like meme coins. Dogecoin, for example, went from $0.0002 to ~$0.74 at its peak (about a 3,700x return), but most investors missed the early phase of growth.
2. Liquidity Constraints
Let’s say you hold $1 million worth of PEPE, but the trading volume is only $2 million daily. If you sell all at once, the price might drop significantly due to low liquidity.
Assume:
• Your $1 million holdings represent 20% of daily volume.
• Slippage causes a 30% price drop.
After selling:
• Net Proceeds = $1,000,000 × (1 - 0.30) = $700,000
• Loss due to slippage = $300,000
The more you sell, the harder it becomes to get full value for your holdings.
3. Math of Market Cap
Suppose PEPE’s price is $0.000001 and the market cap is $500 million. For your holdings to grow 100x:
• New Market Cap = $500 million × 100 = $50 billion
Achieving a $50 billion market cap would mean PEPE surpasses established projects like Cardano or Solana. This is unlikely unless there is mass adoption or speculative mania.
4. Probability of Success
• Assume 90% of meme coins fail.
• Suppose you invest in 10 coins with $100 each.
• 9 coins go to $0, and 1 performs 100x.
Your total outcome:
• Losses = 9 × $100 = $900
• Gain = $100 × 100 = $10,000
• Net Profit = $10,000 - $900 = $9,100
While this sounds good, you need to correctly pick the 1 in 10 that will succeed, which is extremely difficult without inside knowledge or luck.
5. Time and Opportunity Cost
Even if a coin does 10x your $1,000 investment in 6 months:
• Profit = $1,000 × (10 - 1) = $9,000
• Opportunity cost: Could you have made similar or better returns elsewhere with less risk
