The hedge fund industry has been deeply affected by the memecoin craze of late. Last December, when “Dogwifhat” became the focus of the cryptocurrency market, Newport Beach, California-based hedge fund Stratos duly launched an investment product containing the token. The fund returned as high as 137% in the first quarter. Although WIF prices have corrected more than 40% from their highs, their early investors still achieved significant gains.
In addition to Stratos, macro hedge funds such as Brevan Howard have also entered the memecoin field and made "small-scale" investments. Pantera Capital welcomes this phenomenon and believes that "memecoin trading contains huge opportunities."
Memecoins are also popular among retail investors. According to the decentralized data platform Dex Screener, most of the top trading volumes on decentralized exchanges are memecoins. Driven by this popularity, the overall market value of memecoins has jumped to about $54.7 billion.
“Team members are personally investing in memecoins even if the fund itself has not officially included such tokens,” Stratos founding partner Renik Paley revealed.
Still, some cryptocurrency experts are wary of meme coins, noting that such tokens often lack substantive links to specific projects and often spring up quickly based on popular internet memes, characters or trends.
It is worth noting that some meme coins are operated by groups, with the intention of cashing out quickly after large-scale promotion through social media. In this regard, Quinn Thompson, founder of Lekker Capital, commented: "This is no different from trading meme stocks such as GameStop in the traditional market. It is essentially a gambling behavior driven by retail investors."
Despite the concerns, the memecoin-related market is showing more diverse and complex characteristics. In particular, centralized exchanges that allow futures trading of major memecoins have enabled hedge funds to effectively hedge their risks by taking advantage of volatility.
Josh DeVos, a senior researcher at CCData Labs, pointed out: "As liquidity increases and the infrastructure around memecoins becomes more solid, it is expected that the attention to these tokens will further increase in the future."
Rennick Farley also said: "More and more hedge funds are beginning to take memecoins seriously. I would not be surprised if a company set up a fund specifically for memecoins, just as there are funds focusing on NFTs."
