Author: Stephen Katte, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Cryptocurrency executives say memecoins play an important role in attracting people to the cryptocurrency space, but the lucrative returns that have attracted new investors may not last.
During an Aug. 13 panel discussion at the Canadian Futurists Conference, Appchain Noble CEO Jelena Djuric said that while the memecoin season is still moving forward, she is skeptical about its longevity in the market.
“Similar to ICOs and NFTs, it won’t last forever and it will be interesting to see what happens next because it will inevitably come to an end.”
As of August 14, Coingecko lists 1,673 memecoins with a total market value of approximately $41 billion.
However, Djuric believes that memecoin is just the latest phase of “retail mania” in cryptocurrency.
WonderFi's Dean Skurka, Blossom's Maxwell Nicholson, and Noble's Jelena Djuric at the Canadian Futurists Conference. Source: Cointelegraph
“The initial phase, the first phase was obviously the ICOs in 2017, which was the first opportunity for retail investors to get decent returns,” she said.
“There’s really no such opportunity now, even though we still have token launches, layer 2s, and Cosmos chain launches. You really don’t have the same opportunity for returns.”
The initial coin offering (ICO) boom began in 2017, raising an estimated $4.9 billion. By 2018, that number jumped to $33.4 billion. However, by 2019, that number had fallen to just over $370 million.
Non-fungible tokens (NFTs), which have surged in popularity and prices in 2020, are another example, Djuric said.
On February 21, 2021, digital artist Mike Winkelmann (aka Beeple) made history when his NFT artwork “Everydays: The First 5000 Days” sold for over $69 million. The current price on Coingecko is 6.99 Ethereum, or about $19,009.
The market value of NFT peaked at $320 billion. As of August 14, its market value is about $74 billion. Source: CoinMarketCap
“I think the emergence of Memecoins was a perfect opportunity when Solana’s gas fees were clearly very low and the Solana chain had demonstrated its ability to facilitate these high-volatility transactions,” Djuric said.
“Secondly, you have the appetite. You have that latent demand. We’ve had a couple of years since the DeFi summer and the NFT craze, and I think it just happened to be born out of a perfect opportunity.”
Crypto platforms should embrace memecoin
It’s unclear whether memecoins will follow the path of ICOs and NFTs. Dean Skurka, president of asset management firm WonderFi, said platforms should embrace them while they’re still popular.
“I think there’s a clear trend here that there’s a real social element, a community element to retail trading in general, and certainly with memecoin. I think it’s important for platforms like ours to embrace that,” he said.
Despite starting out as a joke, Pepe, Dogecoin, and Shiba Inu have all gained significant market capitalization. Source: CoinMarketCap
Skurka believes that embracing trends as they emerge and fostering conversations about them is an opportunity to attract more people to the ecosystem and retain them.
“Not every memecoin, investment or speculative bet will end up being successful, but it does bring people into the ecosystem,” he said.
“From there, it’s a matter of education and perseverance, and finding the balance between speculative investments and more stable investments like Bitcoin and Ethereum.”
Maxwell Nicholson, co-founder and CEO of digital investment platform Blossom, agrees that speculative assets like memecoin attract people to the space and could cause them to stay and diversify their holdings.
Nicholson said the 2022 bear market was a first for many people who entered the space during the previous bull market and experienced market volatility for the first time.
"They really got ripped off. It really taught people maturity. We saw a lot of people starting to diversify their portfolios," he said.
“A lot of people are really starting to buy more large-cap blue-chip stocks, whether it’s crypto or the stock market.”
Nicholson said this could be “good for the market” because if too many people get ripped off, it could make people lose interest in cryptocurrencies.
“It makes people lose interest in the stock market, and some people may never return to it.”
He added: “A lot of people don’t start out betting everything on these speculative assets, but rather put a small portion of their portfolio, say 5% to 20%, in the more speculative assets and put the bulk of their portfolio into longer-term investments.”
