Cryptocurrencies have always struggled with credibility among non-currency traders, who point to a lack of intrinsic value, price volatility, and regulatory concerns.
These criticisms look even more compelling when applied to memecoins, which often exist without a basic purpose or specific practical use case.
Memetic coins, on the other hand, offer social value and have an astonishing ability to capture the spirit of the times, which, combined with hype and fear of missing out (FOMO), has led to significant price appreciation and the early coin’s can lead to exponential gains in investors.
Memecoins and their prevalence within the crypto industry are often cited as a major factor in the low status of cryptocurrencies among the general public. But in all fairness, cryptocurrency’s credibility problem runs much deeper than memecoins.
Dogecoin is the top dog
On April 17, Pepe rolled out and caught the attention of crypto investors as it surged from zero to an all-time high of $0.00000431 in two weeks.
During this period, social media was flooded with posts about Pepe’s early investors becoming overnight millionaires, perpetuating the cycle of hype and FOMO and sparking a tailwind for further price increases.
Are listed Purpose of PEPE It’s “Making Meme Coins Great Again”. Its roadmap focuses on non-technical milestones like trending on Twitter. Its creators believe that “pure meme power” will make Pepe the new “King of Memes”.
However, it will not be easy to achieve Dogecoin status. Since its release in December 2013, Dogecoin has always been popular as evidenced by its consistently high rankings. market capitalization.
In 2021, Dogecoin took things further, especially among some investors who had never used the coin before. It was driven by a grassroots movement against Wall Street hedge funds profiting from the demise of GameStop and AMC.
It is unclear why the Wall Street Bets crowd chose Dogecoin as the cryptocurrency to “stick into the system.” But that’s probably because the coin was perceived as the “people’s champion”.
DOGE will open in 2021 at a price of $0.005, reaching a new all-time high of $0.74 five months later. This equates to a staggering 14,700% increase. At the time, observers in both crypto and non-crypto circles did not believe that the price of the joke cryptocurrency could rise by such a large amount.
Textbook guides to investing cover topics such as market trends, fundamentals, and learning to reduce risk. However, Dogecoin broke the rulebook and proved that it doesn’t always take a deep understanding of digital assets or thoughtful research and analysis to make an investment profitable. In this case, all it took was memes and fun while stealing hype coins.
Dogecoin’s 2021 rise, and more recently Pepe’s, show that hype can sometimes outweigh fundamentals, giving the corruption that exists within all of us a special allure. bring.
Meme coins have no stickiness
Two years after Dogecoin’s all-time high, Dogecoin has failed to regain its former glory.
Since Bitcoin’s November 2021 high, DOGE has been caught in a macro downtrend, finding support around the $0.055 level. Even with the overall price rally in 2023, DOGE is clearly closer to the bottom than the top of the trading range.
The Dogecoin Foundation is looking to move away from its joke origins, rebranding it as a payment coin in late 2021. However, this has not yet sparked a resurgence of interest in the project.
Whether the $1 price can be achieved is debatable. However, based purely on price chart analysis, it is clear that the hype and FOMO have moved forward.
Following Pepe’s listing on Binance May 5ththe token recorded a 71% drawdown, ending in the red for the third straight week, and is set to continue the same deficit this week.
Pepe 24 hour volume has gradually declined from $1.6 billion on May 5 to $120.3 million on June 1, indicating a significant decline in demand.
Both tokens, especially Pepe, are in the early stages of their lifecycles, so there’s a good chance things could turn around, but investors should be well aware that memecoin booms are often short-lived. Similarly, many memecoins are high-risk speculation.
For these reasons, losing money on memecoins is entirely up to those who choose to invest in memecoins, and it would be foolish to place a large bet that they cannot afford to lose.
All too often we hear calls for protection against malicious calls, scammers, rug pulling, and more. The industry needs proper safeguards to go mainstream, but too many examples of losses are self-inflicted.
Degens buys certain crypto assets without due diligence or proper research. As such, the Degen have a reputation for putting profit above all else, and some perceive them as naive and inexperienced gamblers.
But the reality is that degeneration exists within all of us, to a greater or lesser extent. In fact, a balanced portfolio that considers the risk to potential gains should include a small allocation to longshots.
Furthermore, due to the novelty of digital assets and the facetlessness of digital transactions, all cryptocurrency investments carry risk, so classifying memecoins as high risk without recognizing the risks of so-called high-end chips is a mistake. Somewhat shortsighted.
While corruption and the get-rich-quick ethos create a risky investment market, perhaps other, more serious problems are at work.
Cryptocurrency credibility issues
Besides memecoins, there are several other factors that negatively affect the reputation of cryptocurrencies.
- High price volatility – Digital assets can be unpredictable and risky investments. Sharp price movements raise concerns about stability and long-term viability, especially when investing as a store of value.
- Regulation – Authorities are catching up on how best to oversee the industry. In prudent jurisdictions, tax evasion, money laundering and use for illegal activities are used to justify strict rules. Without a legal framework in place, the average non-coin-using person would be unlikely to be involved.
- Security – The underlying blockchain technology is considered secure. But there are weaknesses in social engineering, custodial regimes, and smart contract abuse. Unlike legacy finance, with cryptocurrencies there is little remedy once they are gone.
- Fraud – From exit fraud ICOs to worthless Ponzi tokens, the prevalence of malicious activity is driven by the faceless and global nature of digital transactions.
- Low Adoption – Estimates Only 4.2% People all over the world own cryptocurrencies. Relatively low adoption hinders adoption because people tend to follow what others are doing.
Indeed, memecoins have contributed to the cryptocurrency’s bad reputation. But the problem goes deeper than memecoins alone.