The world of cryptocurrencies is ever-evolving, with memecoins emerging as a significant component within the blockchain and digital currency communities. According to insights from Binance Research, memecoins present a unique value proposition, particularly in the context of the expanding global money supply and the increasing appetite for risk-on investments.
The Correlation Between Memecoins and Global Money Supply
As the world’s financial resources become more accessible, investors are increasingly drawn to high-risk, high-reward options such as Bitcoin, altcoins, and memecoins. Although these digital assets promise substantial returns, they are also characterized by high volatility and limited practical applications. Despite these challenges, the recent performance of memecoins has been noteworthy, with their market capitalization surging by 22% following the US election.
Leading Memecoins: Doge and PEPE
Doge and PEPE coins have emerged as two of the most successful memecoins, recording significant gains. On a recent Wednesday, Doge added 15% to its value, while PEPE increased by 11%, highlighting their potential as investment vehicles.
Binance Research: The Surge in Memecoin Launches
A comprehensive report by Binance Research in November 2024 emphasizes the growing popularity of meme currencies. The increasing global money supply has prompted retail investors to seek alternative wealth-generation avenues, leading to a significant rise in memecoin launches. In fact, the market value of this niche has tripled since 2022, driven by the coins’ widespread appeal.
The Shift in Funding Strategies
The Binance report also sheds light on the regulatory skepticism surrounding Initial Coin Offerings (ICOs). In response, developers are now leaning towards private venture capital funding (VCs) to support their projects. This strategy, often described as the “Low Float and High FDV” approach, involves offering a limited number of tokens for trading while maintaining a high valuation.
Memecoins: An Accessible Investment Avenue
While this funding model benefits developers and early adopters, it poses risks for average investors. Consequently, many retail investors turn to meme tokens as alternative investment options. Their accessibility and appeal are primary factors driving their popularity.
Binance reports that approximately 75% of all meme currencies were launched in the previous year. Although launching these projects is relatively straightforward, sustaining their operations remains a formidable challenge. The report highlights that around 97% of all memecoins have failed, with only a few surviving by leveraging the election hype of the current year.
The Impact of Election Hype on Memecoin Performance
Despite their speculative nature, memecoins are regarded as community-driven, accessible investments. Many in the cryptocurrency community have banked on a “meme coin supercycle” aligning with Bitcoin’s upward trajectory. This strategic gamble has paid off, with the market cap of memecoins now exceeding $73 billion, reflecting a remarkable 22% increase.
