Behind the Meme Coin Craze: How Emotions Are Becoming the New Form of Capital

This National Day holiday, while the A-shares market is closed and investors are still shoulder to shoulder in scenic spots, the crypto world is staging an even crazier show.

Within a certain leading exchange ecosystem, several obscure Meme coins have seen their market caps multiply dozens of times in just a few days. PALU and similar tokens that sound like jokes have allowed some early participants to easily realize gains exceeding one million USD on paper. The Chinese-speaking crypto community is completely boiling over, with KOLs on Twitter cheering and celebrating as if they’ve discovered a new continent.

But the good times didn’t last long. Starting October 9, these tokens began to plummet freely. Some coins experienced single-day declines of up to 95%. Over 100,000 traders were liquidated, with a total amount of $621 million.

The myth of overnight wealth has instantly turned into a blood-stained history.

I’ve seen scenes like this both on Wall Street and in Lujiazui.

Dialogue of Two Worlds

Remember the GameStop incident in 2021? Retail investors on Reddit banded together to push the stock price of a near-bankrupt game retailer up by thousands of times, causing massive losses for short-selling institutions. The US SEC chairman called it a “milestone in behavioral finance.” Although the prices seemed absurd, as long as the trading was genuine and information was fully disclosed, it was considered “part of the market.”

Americans’ logic is straightforward: let bubbles happen because bubbles are catalysts for market evolution.

What if this Meme coin frenzy had happened on Nasdaq? New financial products would emerge—like “Meme Hot ETF,” quantifying social media buzz into investment factors; The Wall Street Journal would have lengthy discussions about the “victory of retail capitalism”; regulators would initiate studies on “social media market manipulation,” but ultimately might conclude: this isn’t fraud, but a financial reaction driven by group sentiment through algorithmic matchmaking and social dissemination.

And in China, the story is another version.

If similar events occurred on the Shanghai Stock Exchange, regulators would quickly issue risk warnings, media would call for rational investing, and the entire incident would be labeled as a “speculative market anomaly,” becoming a vivid case for investor education. The Chinese market’s logic is “steady progress”—liveliness is allowed, but order must be maintained; innovation is welcomed, but risks are borne by individuals.

Meme Coins Living in a Third World

The brutal truth about Meme coins is that they are neither constrained by the US SEC nor governed by the China Securities Regulatory Commission. They are a lawless zone, a gray financial experiment formed by code, liquidity, and narrative self-organization.

Here, American-style social speculation mechanisms (information fission + collective momentum) bizarrely fuse with grassroots wealth psychology (resonance + community participation).

Exchanges are no longer neutral platforms but have become “narrative creators”; KOLs are no longer bystanders but amplifiers of prices; retail traders indulge in self-celebration and self-destruction within cycles of algorithms and consensus.

The most fundamental change is: prices are no longer determined by cash flow but by the speed of narrative and the density of consensus. We are witnessing the birth of “emotional capital”—a form of capital with no financial statements, only cultural symbols; no company fundamentals, only consensus curves; not pursuing rational returns, but only emotional release.

The Truth Behind the Data

Cold data tells a story: in the first nine months of 2025, 90% of top Meme coins’ market caps collapsed; in Q2, 65% of new tokens lost over 90% of their value within half a year. It’s like a gold rush in the digital age—most prospectors lost everything, only those selling shovels made a profit.

But that’s the core issue: when currencies start telling stories, the logic of global finance is being fundamentally rewritten.

In traditional markets, prices reflect value; in crypto markets, prices create value. This is the extreme of decentralization, but also possibly the limit of abdication of responsibility. When narrative replaces cash flow, and emotion becomes an asset, each of us becomes a participant in this experiment.

Where Is the Way Out

The Web3 industry stands at a crossroads: continue to indulge in the short-term frenzy of “emotional capitalism,” or move toward the long-term construction of a “value-driven ecosystem”?

The answer is clear: strengthen community governance, introduce more transparent regulatory frameworks, and establish investor education mechanisms. Only then can decentralized technology truly empower global financial fairness, rather than becoming a tool for a few to harvest profits.

Next time a KOL wildly recommends a “hundred-bagger coin,” ask yourself: Am I participating in financial innovation, or am I paying for someone else’s wealth freedom? When currencies start telling stories, what you need most is not FOMO, but the courage to pause and think.