A photo that turned into an investment trend. Gazeta Olsztynska on what memecoins are

Memecoins are a phenomenon not only in the financial world but also in marketing and social spheres. Dogecoin, Shiba Inu, Pepe - anyone interested in the world of cryptocurrencies has likely heard these names. They have both enthusiasts and critics. So it's worth asking: what exactly are memecoins, and most importantly, what investment value do they represent? We helped to evaluate it in article which was published by PAP and Gazeta Olsztynska to educate users about cryptocurrencies which is the mission of Bitget.

A Few Words About Memecoins

Memecoins are assets whose creation is often inspired by, as the name suggests, memes, including internet characters, current trends, and events. They lack intrinsic value and exhibit moderate correlation with other cryptocurrencies, as well as low dependency on traditional assets. Sudden surges in the popularity of memecoins can create opportunities for significant gains, but it’s important to be aware of the associated risks. Therefore, a thorough understanding of their phenomenon and market mechanics is crucial.

What distinguishes memecoins from other cryptocurrencies is their community-driven nature. Their value is heavily dependent on their popularity in social media. They often catch the attention of market participants, and their prices can quickly rise when well-known personalities endorse them or even just mention them in their statements. When they first become listed on the market, their prices are usually low, which, from the perspective of behavioral economics, makes them seem more accessible to potential buyers.

Musk, Twitter, and Shiba Inu

Memecoins are often associated with speculation. As mentioned, their value usually depends on how well they are received in social media and the level of interest they generate among potential investors. Often, their popularity is driven by effective marketing, celebrity endorsements, a single post on Reddit or Twitter, or sometimes even sheer coincidence.

One of the most recognizable figures with a significant influence on cryptocurrency prices, including memecoins, is Tesla's founder, Elon Musk. His tweets, subtly referring to specific memecoins, can significantly increase their value within hours. An example is from Christmas 2021, when Musk shared a photo of his Shiba Inu dog dressed as Santa Claus. Soon after, the Santa Floki Coin surged in value by 18,000% within just two days.

New Tokens Fueling the Memecoin Market

According to BDC Consulting data, the memecoin market was valued at approximately $22 billion in the fourth quarter of 2023, but by the first quarter of 2024, its capitalization had increased by 160%, reaching $60 billion. This dynamic growth is driven in part by the increasing number of new tokens entering the market. In Poland, Hamster Crypto and Hamster Kombat coins have recently gained popularity and become among the most frequently searched cryptocurrency-related terms.

“A noteworthy and growing trend is the increasing number of memecoins created on the Solana blockchain. Due to its accessibility and high performance, Solana has become a preferred tool for token creators. Celebrities, by using its capabilities to create their own coins, have significantly boosted Solana's recognition on a large scale,” comments Alvin Kan, COO of Bitget Wallet.

Analysis as the Key to Responsible Investing

As with any investment decision, it’s important to conduct thorough analysis to minimize the risk of potential losses. For memecoins, it is crucial to examine their tokenomics, or the economics of the cryptocurrency. This explains the factors influencing its use and value. Additionally, check the credibility of the team behind the coin and be cautious with projects that do not disclose their creators’ identities.

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