Meme coins in the cryptocurrency market: from joke to serious asset

What Meme Coins Are

Meme coins are cryptocurrency assets created based on popular internet memes and cultural phenomena. The pioneer in this category was Dogecoin (DOGE), launched in 2013 as a joke by programmers Billy Markus and Jackson Palmer. The coin quickly gained popularity thanks to its mascot – the famous meme of a Shiba Inu dog named Kabosu.

The key feature of meme coins lies in their exceptional volatility. Unlike major cryptocurrencies like BTC or ETH, these assets exhibit unpredictable price jumps that can occur within hours. Price dynamics are heavily influenced by community sentiment, social trends, and the FOMO effect.

Most meme coins have a huge supply. For example, Shiba Inu (SHIB) has a total supply of 1 quadrillion tokens, while DOGE has not set a maximum supply at all. The lack of token burning mechanisms leads to inflationary pressure and relatively low prices per unit.

Why meme coins gained mass popularity

The explosive growth of interest in meme coins occurred during the COVID-19 pandemic when retail investors actively sought ways to hedge against inflation. A pivotal moment was the event with GameStop and AMC stocks, when Reddit users coordinated to drive up the prices of these assets. The cryptocurrency community decided to replicate this experience by raising the value of Dogecoin as a crypto equivalent of GME.

The movement has received support from influential figures, including the CEO of Tesla. The rapid rise of DOGE has attracted traders' attention to other meme projects, especially Shiba Inu (SHIB) and later to PEPE.

The attractiveness of meme coins is explained by several factors:

• Affordable price: most tokens cost a few cents, allowing you to acquire thousands or millions of units
• Network effect: belonging to a community and supporting a fun idea creates a strong emotional connection
• Fair distribution: many projects ( including DOGE) were launched without pre-mining, which attracts supporters of decentralization.
• Institutional recognition: the launch of the meme coin index in 2024 and mentions in authoritative sources have increased the legitimacy of this segment.

As of June 2024, the total market capitalization of meme coins reached ( billion, demonstrating the significant weight of this category in the crypto ecosystem.

Top meme coins and their characteristics

**Dogecoin )DOGE$63 ** — $0.13 per token, market capitalization $22.10B. Originally using the Proof of Work algorithm as a fork of Litecoin, DOGE has turned into a symbol of meme coins and demonstrates greater resilience compared to its competitors.

Shiba Inu (SHIB) is positioned as the “Dogecoin killer.” Launched in August 2020 by an anonymous developer, this coin has created an entire ecosystem that includes a decentralized exchange, NFT marketplace, and games.

Pepe (PEPE) with a market capitalization of $1.71B is built on nostalgia for the popular internet meme featuring a frog. Launched in April 2023, it quickly gained fans within internet culture.

Dogwifhat (WIF) (current price $0.34) is distinguished by being exclusively a joke token with no claims to functionality, pure memology.

BONK ( market capitalization $670.96M) — a meme coin on the Solana blockchain that gained popularity due to the charitable distribution of 50% of its supply to the community.

FLOKI is inspired by Elon Musk's dog and will attempt to combine memes with real utility through an NFT ecosystem and staking.

Critical Risks and Dangers

( Tokenomic risk

The main difference between Bitcoin and meme coins lies in their fundamental architecture. Bitcoin has a clear white paper, a fixed maximum supply of )21 million coins###, and an built-in deflation mechanism. Most meme coins, on the other hand, possess an inflationary characteristic, a huge or infinite supply, and a lack of a clear use case.

( Extreme volatility

Meme coins are entirely dependent on social sentiment. The price can skyrocket after any mention on social media or by an authoritative person, or it can crash in an instant when the community's attention shifts to another asset. This characteristic makes them unsuitable for conservative investors.

) Large-scale liquidity withdrawal scams

The history of meme coins is filled with examples of rug pull schemes:

• SQUID ###2021###: inspired by the series, attracted millions, but the developers disappeared with the investors' money
• BALD (July 2023): the team removed all liquidity from Base, and the price dropped to zero within hours.
• MetaSwap ( start 2024): the developers suddenly withdrew liquidity, devaluing all holdings.
• URF (March 2024): the presale raised (000, the team disappeared 24 hours after launch, despite promotion by a well-known influencer.

How to protect yourself when investing in the meme segment

) Minimizing risk before purchase

1. Own research $450 DYOR###: carefully study the development team, their achievements, roadmap, social channels. Check for information on the team's experience in the industry.

2. Tokenomics Analysis: study the supply dynamics, the percentage of locked liquidity, the presence of burning or staking mechanisms. Projects with unlimited supply are more susceptible to inflationary pressure.

3. Portfolio diversification: do not concentrate all funds in one meme coin. Distribute the risk among established large-cap assets (BTC, ETH, SOL, BNB) and speculative positions.

4. Monitoring the information field: keep track of news through search services and social channels of the project (Discord, Telegram, Twitter). An active and positive community is a sign of a healthy project.

5. Using stop-loss orders: set automatic sell levels to limit losses in case of an unexpected price drop.

6. Emotional control: invest only the amount of funds that you can psychologically withstand losing. Avoid impulsive decisions influenced by FOMO or aggressive marketing.

( Protection against fraudulent schemes

1. Liquidity check: make sure that the project has locked liquidity through reliable services. This will prevent developers from instantly withdrawing funds.

2. Smart Contract Audit: If you have the skills, review the code or seek a professional audit from recognized organizations. Pay attention to functions that allow for unlimited token creation or large transfers.

3. Team Identification: anonymous developers are a significant red flag. Choose projects with open teams that are willing to put their reputation on the line.

4. Community Engagement: An active and genuine community indicates legitimacy. Beware of projects with inflated subscribers and pressure for quick purchases.

5. Roadmap Analysis: Real projects provide detailed plans with specific timelines. Compare promises with actual achievements. Frequent deadline extensions and unrealistic goals are signs of trouble.

6. Dangerous signals: be especially cautious if a project relies entirely on celebrity endorsements in the absence of information about the technology, high-pressure mechanisms )limited offerings, guaranteed returns ### practically guarantee fraud.

Concluding Thoughts

Every day new meme coins emerge, attracting traders' hopes of repeating the success story of DOGE or SHIB. However, statistics show that the overwhelming majority of such projects end in failure.

Meme coins are a highly speculative class of assets governed by the community and subject to radical fluctuations. Before investing any funds, conduct thorough research, assess your personal risk tolerance, and remember: only invest money that you can afford to lose without harming your financial situation.

Risk and potential profit in this segment are at opposite ends of the spectrum. Successful trading of meme coins requires discipline, knowledge, and cold calculation, rather than emotions and FOMO.