Meme Coin Phenomenon: What is driving the hype?

Whether it is the coins created after former or current presidents of the United States of America or the famous doge that birthed the popular cryptocurrency Dogecoin, one can barely go a day without coming across the new meme coin. 

Whether you like it or not, such coins have usurped the market of cryptocurrencies, with some having achieved a billion-dollar market capitalization. Most importantly, what is the real value of hashtags, why appear to be so popular, and what awaits in the future? To do this, let us attempt to explain this phenomenon within the scope of our article.

What is a meme coin?

Meme coins are tokens or cryptocurrencies that go viral on social media platforms due to their association with memes or pop culture standards. These coins often have a comedic or ironic twist in them and appeal to certain aspects such psychology of humour fear of missing out, and entertainment crave. This offers a perception of the hỡp and a positive attitude which attracts investors and users. Overall, meme coins rely on the basic strategy of popularization within the targeted social platforms and communities.

Meme Coins and Their Evolution

On 6 December 2013, Dogecoin was created by software engineers Billy Marcus and Jackson Palmer. What they wanted to do with their coin was bring cryptocurrency into the life of the average person in a fun way, using the hilarious meme of Kabosu — a Shiba Inu dog. The developers surprisingly misspelled “dog” as “Doge” to highlight the fact that it was a meme coin. To their astonishment, Dogecoin gained followers within no time.

ogecoin’s rapid growth even though there is no real value behind it can be attributed to social media mania. One famous supporter of Dogecoin is Elon Musk, CEO at Tesla, who began tweeting about it and called himself the “father of Doge.” This caught the attention of investors and influencers who pushed its value up to an all-time high price of $0.5 in May 2021. At present, Dogecoin has more than $17 billion market capitalization, thus making it ranked eighth among various cryptocurrencies by market capitalization today.

Read more :- 7 Best Cryptocurrencies To Invest In July 2024

The Rise and Impact of Meme Coins: Shiba Inu and PEPE

Other meme coins, like Shiba Inu, became popular thanks to the success of Dogecoin, which gained significant attention and endorsement from famous personalities such as Elon Musk. A person known as Ryoshi anonymously created Shiba Inu in 2020 an ERC-20 token on the Ethereum blockchain. Despite lacking a fundamental use case, Shiba Inu has thrived, ranking 12th among top cryptocurrencies valued at around $10 billion.

Boosted by Elon Musk’s tweet about wanting a Shiba Inu puppy in March 2021, the SHIB coin surged up. Just within five days following his tweet and an image of a puppy, SHIB’s market capitalization skyrocketed thereby increasing its price twenty times.

The year 2023 witnessed a new era for memecoins with PEPE being introduced. The @pepecoineth page on Twitter came out in early April with the slogan “Make Memecoins Great Again,” responding to the famous green frog meme. Then two weeks later PEPE token was launched by anonymous developers who issued 420.69 trillion coins that were traded on Uniswap, a decentralized exchange platform. 

Influencers discussed PEPE on Twitter, Telegram and Discord leading to over 900% increase in its price within one day and market capitalization exceeding $1.6 billion in less than three weeks. Today, Pepe tokens rank third among meme coins alongside Shiba Inu and Dogecoin.

What drives memecoins price? 

If the majority of meme coins do not serve any actual purpose, then, what causes the market value to increase? Let’s explore the key factors:

FOMO

Suppose a friend decided to invest in a new meme coin and became a millionaire (at least this is how people express such success). Of course, you wouldn’t pass a similar opportunity Again, one would not deserve a similar opportunity. This is the ‘Fear of missing out,’ better known as FOMO, and this is what makes individuals put their money in thinking they will get that big outcome.

Another way CoinGecko’s historical data makes FOMO worse is that it hails from past efforts. For instance, had you invested $12 in SHIBA in 2023 or $820 in DOGE in 2013, you stand a chance of being a meme coin millionaire today.

Social Media Hype

Of the following factors, there is partial truth in word of mouth and the hype created by social networks. Many started sharing and narrating various success stories of these unknown traders including one who could earn $266,600 from an initial investment of $690 through DADDY memecoin. Such influences create product buzz, which in turn results in demand, leading to this value of the coin.

Celebrity endorsements

Social factors such as endorsement by celebrities also play a significant factor in memecoin price fluctuations. This is because the value of the coin partly depends on Elon Musk’s tweets, and hence, Dogecoin’s value is highly volatile. For instance, in May when Musk said that Tesla would start utilising Dogecoin to purchase specific goods, the number one dog surged by more than 20%. 

Strong community

Another common characteristic is that meme coins are highly likely to create a dedicated and engaged community. If your friends and your favourite celebrities are active in what they call “Shiba’s Army,” then you would not regret paying for the service on this website. But it gets even better; some meme coins allow individuals in the community to have some level of decision-making authority over the project. For instance, the BONK community decided to burn 278 billion BONK for the celebration of a significant event.

Partnerships, contests, and giveaways, which lie in the sphere of marketing communication, help to support such communities and draw interest.

Emerging Utility 

Despite the prospects, many meme coins launched with zero utility cases but developers are trying to introduce utility. The previous meme coins were Ethereum, Dogecoin, and Shiba Inu, but there is a new generation of meme coins that will soon capture mainstream uses. For instance, the Doge group created Dogechain which is a blockchain platform where users can access products like NFTs, games, and other WSB3 services via the Doge coins. This gives Dogecoin a value other than being just a meme coin as it has wider use in the Elrond ecosystem.

Financial Incentives

An example of such a centrifugal mini-game is Hamster Kombat, a tap-to-earn game that involves the Hamsters. It however had not yet released a coin; however, it boasts of having more than 150 million users, with the provision of issuing new type of cryptocurrency.

The current situation with meme coins in 2024

In 2024, the meme coins format will remain prevalent while the BTC price declines. Despite this, major players in the market have begun to pay attention to meme coins as well recently. For example, Arthur Hayes, co-founder of the BitMEX exchange, recently declared intentions to accumulate even more PENDLE tokens in his portfolio along with DOGE tokens. 

He also said that he owns DogeUtilityTokens such as Dogecoin, Bonk, and Dogewifhat among other essentials in his portfolio. At the same time, Real Vision CEO Raoul Pal has high expectations of the CEO of Tesla for him “to do something with DOGE. ”

However, not all people are that optimistic about these types of stocks. Other industry experts such as the CEO of CryptoQuant believe that the period of meme coins will be over soon as their proportion in the entire altcoins market drops. CryptoQuant aims to follow the same path as it did a few years ago, gradually leaving the meme-based coins market and devoting itself to solid projects.

In summary, meme coins will stay prominent and impactful in 2024, yet their future is viewed quite differently. Some investors have hope and are adding to their stakes while others are saying for the worse with the expectation to start more ground-up undertakings.