In this article, I will delve into how to identify promising Memecoins and explain why I believe that as the year comes to a close and 2025 approaches, this sector will continue to show strong momentum.
Written by: Michael Nadeau, Founder of The DeFi Report
Translated by: Glendon, Techub News
Among the top 20 performing cryptocurrency assets this year, 14 are Memecoin projects, a statistic that is hard to ignore.
In this article, I will delve into how to identify promising Memecoins and explain why I believe that as the year comes to a close and 2025 approaches, this sector will continue to show strong momentum.
Changing the Perception of Memecoins
At the beginning of writing this article, I was somewhat conflicted. I knew that some readers have an instinctive aversion to Memecoins. I can understand this, as I have felt the same way.
Looking back at the last market cycle, I could hardly tolerate Memecoins. To me, projects like Dogecoin (DOGE) and Shiba Inu (SHIB) seemed to mock the industry—something that is undoubtedly hard to accept for a "purist" like me. After all, since I entered the cryptocurrency space, I have focused on on-chain data and fundamental analysis. I believe this industry is largely misunderstood, and I am committed to eliminating the noise. How do I do this? My approach is simple: rely on data, analyze issues through a straightforward framework, focus on business models and cash flow, while maintaining absolute honesty.
However, Memecoins clearly did not meet any of my judgment criteria, so I had no fondness for them.
But about a year ago, when I bought my first Memecoin—BONK (which I still hold today)—my perspective changed.
Why is that?
When I started researching Bonk (BONK), I found it had a strong community and many integrations within the Solana ecosystem, and the team was building something that I could not ignore.
At first, it gained a lot of attention on Coinmarketcap, and I often heard its name on podcasts; I even met a representative of Bonk at a Solana conference. Thus, I clearly realized that some interesting things were happening, and then I purchased the token.
My argument is that BONK could become the "cultural token" of Solana, just as Shiba Inu (SHIB) holds that position in the Ethereum ecosystem.
If this is true, then considering that in the last cycle, SHIB's market cap on Ethereum once exceeded $40 billion, BONK could also have significant upside potential. After all, if you are optimistic about the development of a certain L1, then looking for tokens that may have a high beta value against L1 assets is undoubtedly a wise choice. (Techub News note: high beta value refers to assets with high risk and high return.)
Since then, my view on Memecoins has changed. Of course, I do not advocate that all Memecoins are worthy of being bought and held as investment assets; it is just that some interesting things are indeed happening in this field.
Therefore, the purpose of this article is to hope that more readers can maintain an open and curious mindset, "roll up their sleeves," follow the basic principles, and delve into this field rather than dismiss it easily.
Investing in "Cult" Memecoins
Recently, I have gained a clearer understanding of the fundamental analysis of cryptocurrency assets and networks. This shift was triggered by someone asking me at the end of December 2022 how I viewed Solana. At that time, I could not provide a clear answer from a fundamental perspective because Solana had no fundamentals to speak of. However, I had already done a lot of research before investing.
"I just felt that the community atmosphere of Solana was very similar to Ethereum in December 2018 (when ETH traded at $80). Through data analysis, I found that key performance indicators also showed similar trends. At the same time, I could feel the power of the community, and after researching core contributors, the founding team, investors, etc., I found that although these people had made money, they seemed to want to stick around and 'chew on the hard bones.' So, my intuition told me it would make a comeback."
That was my answer at the time.
But in reality, what I did was identify a "cult," though I had not fully clarified this until I watched Murad Mahmudov's speech at the Token 2049 conference.
When he compared Memecoins to "cults," I had an epiphany. Why is that?
Because my successful investments in the cryptocurrency space can almost all be attributed to "cult-like investing."
Bitcoin, Ethereum, Solana, and Chainlink can all be seen as a kind of "cult," and it can be said that the most powerful cryptocurrency networks (and assets) almost have "cult" characteristics.
Even tech companies like Apple, Tesla, and Barstool Sports exhibit "cult-like" traits.
As investors, we need to identify these "cults."
Because the best brands invariably have "cult-like" followers, and cryptocurrency networks are no different; they just prefer to call themselves "communities" rather than "cults." This reminds me of one reason I firmly bet on Bitcoin in early 2020: I watched an interview with Paul Tudor Jones (a legendary macro trader). In the interview, he mentioned that Stanley Druckenmiller (founder of Duquesne Capital) told him: "The price of Bitcoin once fell from $20,000 to $3,000, but 80% of Bitcoin holders still held on."
This is cult-like behavior, and it is what we should look for in cryptocurrency networks/investable assets, and it is also an important part of fundamental analysis. If you are a value investor, you might find my point a bit far-fetched. But to me, this is a cold hard fact.
Memecoins Perform Well
Why do Memecoins perform well? In my view, there are five key factors:
Retail investor backlash: Retail investors are tired of playing a manipulated casino game with venture capital firms (VCs)—VCs have become accustomed to selling tokens to retail investors at valuations of $8 billion to $10 billion during Series B funding rounds. That said, I do not think this can be entirely blamed on venture capital firms; the lack of regulation and poor legal precedents/guidance have also played a role. However, VCs cannot build a "cult-like" community of users and promoters with high-valued airdrops. Therefore, retail investors have created their own casino and set their own rules.
Token potential: Currently, the market cap of altcoins is about $900 billion, with an estimated $155 billion in tokens expected to unlock over the next five years. In contrast, the market cap of Memecoins is about $45 billion, with emerging Memecoins accounting for about $10 billion. However, Memecoins have no unlocking period, allowing retail investors to participate early in the project, and investors have witnessed DOGE reaching a market cap of $95 billion in the last cycle, and SHIB exceeding $40 billion. Note: I am using data science to identify "Cabal Coins" to distinguish fairly issued tokens from scams or tokens that are more easily manipulated by "insiders."
The need for social connection and belonging: People are spending more time online. They feel lonely, worry about their financial prospects, and seek a sense of belonging. Memecoins happen to meet all these conditions. If you are a "Baby Boomer," it is crucial to understand the impact of the younger generation on the market, as they are gradually becoming the main force in the market.
The rise of the online gambling industry: The online gambling industry has experienced significant growth over the past three years, now valued at $85 billion, with an annual growth rate of 11.7%. Sports betting accounts for about half of this industry, and the growth of mobile betting has outpaced that of offline betting. Memecoins have developed alongside this trend, giving them a greater chance of success.
Market perception shift: The market is gradually realizing that altcoins and Memecoins are essentially selling the same thing—a ticket to the casino. To some extent, this is unrelated to technology; it has always been about speculation (which is not necessarily a bad thing, as Wall Street operates similarly). And Memecoins seem to be a better investment tool for retail investors.
So, how should we identify "excellent" Memecoin projects?
Analyzing and Identifying "Cult-Like" Memecoins
While it may sound somewhat surprising, my focus on Bitcoin and Ethereum during my initial investments in the cryptocurrency space has striking similarities to my current focus on Memecoins. For example:
Qualitative Factors
- Broad "addressable interest" (things people can support globally)
- Strong community (through Crypto Twitter)
- The community remains steadfast despite significant downturns (avoid 99% of new projects, focus on market-tested tokens with a market cap over $100 million)
- Extremely high price targets set by the community
- No unlocking period
- No venture capital firms (can buy in the market like others)
- A good narrative and a community slogan that resonates
- Strong conviction
- Sense of belonging
- A network of independent individuals willing to work for the project (evangelists)
Quantitative Factors
- Token holder growth rate (30, 60, 90 days)
- Average holding time of token holders (based on the last movement of the token)
- Percentage of holders with tokens that have not moved for over 30 days, 60 days, 90 days, etc.
- Percentage of token supply held by the top 10, 50, 100 addresses
- Median holder amount (in USD)
- Number of wallets holding $5,000 or more, $10,000 or more, $250,000 or more, $1 million or more
- Percentage of trades made by wallets that had fewer than 5 trades on DEX in the first week of the project launch (to identify projects with a lot of insiders)
- Liquidity on decentralized exchanges (DEX) and its impact on price
- Listing status on centralized exchanges (CEX)
The key here is to conduct relative comparisons between different tokens to determine the standards for "excellent" tokens.
Memecoins I Like and Why
Next, I will share some Memecoins I have purchased and my research findings. However, please note that the prices of these tokens have increased several times since I bought them. While I believe their prices will go higher, please do your own research, and this should not be considered investment advice.
SPX6900
I believe this token has the potential to enter the top 25 cryptocurrency assets by market cap.
SPX6900 has a huge "addressable interest." Just as Dogecoin performed well initially because many people love dogs, this is a global market where making Memes is very fun.
I believe SPX6900 also has strong global appeal, with its slogans "Flip the stock market" and "Stop trading, believe in something."
This evokes thoughts of Gamestop, but the potential is much greater. Since early September, the SPX token holder community has grown 20 times. The project's Twitter account has gained 25,000 followers in the past month, and each tweet is filled with "cult-like" comments.
Moreover, SPX has a "cult leader," Murad, who holds 2% of the supply and has vowed not to sell for a year (you don't have to fully believe his words, but his wallet has been exposed by the community, making it hard for him to break his vow).
Additionally, many cryptocurrency whales have posted large buy orders on Twitter and have also vowed not to sell for a year. This does not mean we should believe them. But this is cult-like behavior, reminding me of the early stages of Bitcoin.
GIGA
Similar to SPX6900, GIGA is also based on dog/cat iterations, with a very broad "addressable interest." "Gigachad" has been a popular meme on the internet for many years. It originated from Reddit and 4chan and became popular due to its blend of satire, humor, exaggerated ideals, lifestyle/fitness, and irony. We know it has broad appeal.
This token also has a growing Twitter account, strong on-chain signals, a cult-like community, and interesting Memes. It is also a token that Murad has been promoting (and holds a significant amount of).
So, should we be concerned about Murad as an "insider"?
Maybe, but that is not my main concern at the moment. Here’s why:
First, the best cryptocurrency projects (which also applies to Memecoins) have a group of evangelists and storytellers. Murad is very talented in this regard, and he has cultivated a large following. His Twitter followers have jumped from 100,000 to 377,000 in just six weeks, which is a clear positive signal.
Second, I appreciate Murad's approach; besides "shamelessly" promoting his investments, he shares very clear and understandable arguments and provides a lot of useful data to support his ideas. Again, investors need to look for cult-like communities. In fact, there are other influencers in the cryptocurrency space with large followings, but most of them are scammers, lack transparency, and do not share data or arguments. However, retail investors are smart, so I believe they may choose transparent communicators like Murad.
POPCAT
This one is simple; it is profiting from the transition from dogs to cats. While this may sound a bit ridiculous, the data indeed shows this trend. For me, investing in POPCAT is a hedge against my investment in BONK.
Additionally, POPCAT has a very strong community and a solid on-chain foundation, and it is gaining momentum, making it likely to become a winning "cat coin."
Risk Factors
When dealing with Memecoins, never forget that you are under the shadow of "tail risk." Again, please make sure to do your own research. (Techub News note: tail risk refers to significant risks that may occur in extreme market environments, events that have a very low probability of happening but can lead to massive losses if they do.)
Here are the main risks I believe need to be considered when investing in Memecoins (in no particular order):
- Regulatory risk: If the cryptocurrency industry can achieve good regulation, it may mean that altcoins can gain more innovative space in token economic design, thus bringing returns to holders. This could affect the market's perception of value and drive investors toward altcoin assets. However, I believe this will still take some time to materialize, and currently, it is not a huge risk.
- Liquidity risk: If a Memecoin does not have sufficient liquidity, its market value is meaningless.
- Large holder sell-offs: Understand on-chain data to avoid being scammed by a Rug Pull.
- Market sentiment/macroeconomic shifts: Memecoins operate based on market sentiment and liquidity. Therefore, if there are shifts such as inflation or geopolitical tensions, it will first affect cryptocurrencies (and Memecoins).
- Attention shift: The success of Memecoins largely depends on public attention. It is important to know that what is popular today may quickly be replaced by new narratives, especially for projects that have already seen significant growth (insiders will profit and move on to new opportunities).
- Consensus viewpoint: Memes are becoming a consensus bet among cryptocurrency natives, requiring a constant influx of new users to maintain their vitality.
Conclusion and Final Thoughts
Things that perform well in the early stages of a cryptocurrency cycle often continue to perform well in the later stages. I believe this cycle's Memecoins may be such.
Assets that are difficult to value often have unimaginable upside potential. The reason is that once they can be valued through methods like discounted cash flow (DCF), the price ceiling of that asset is determined. In contrast, unvalued assets may hold greater upside potential.
DOGE once reached a market cap of $95 billion, providing opportunities for new Memecoins, proving that Memecoins with mass appeal can also shine in the market.
Financial nihilism is real, and Memecoins are a vivid interpretation of this nihilism. They represent a bet against the uncertainty of financial markets and are a way for investors to seek novelty and excitement.
Approach Memecoins rationally; if you develop a strong interest or concern about Memecoins, make sure to delve deeper into them rather than being swayed by emotions.
I have strategically chosen to trade memecoins on Solana. In my view, the Memecoin ecosystem on Solana is the most prosperous.
Do Memecoins have utility? Memecoins provide "C to C" services, meaning customer to customer. They represent values such as entertainment, community, and reducing loneliness (even though this sounds a bit sad). To some extent, the revenue of Memecoins is not realized through traditional means but is reflected in the capital appreciation of the tokens.
Memecoins are more suitable as a short-term trading tool rather than a multi-cycle investment object. Investors should be clear about this and formulate their investment strategies accordingly.
I believe that if a market frenzy similar to the altcoin season occurs again, there could be 25 (or even up to 50) Memecoins entering the top 100 cryptocurrency assets. Currently, this number is only 10, indicating significant growth potential in the future.
From personal experience, I have had multiple conversations with several serious institutional investors in the cryptocurrency space regarding Memecoins. I believe we are still in the early stages, and the development trend of Memecoins may continue.
Finally, I want to emphasize that you should never invest more than you can afford to lose. If you invest in Memecoins and it keeps you up at night, then you have already lost. So, please make sure to avoid this situation.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
