While some individuals may not appreciate memes, the majority of people enjoy sharing a good laugh and using memes as a way to unwind and destress. Memes have evolved into a significant facet of humor, poking fun at various aspects of human existence. Undoubtedly, memes have left an imprint on the cryptocurrency market, leading to the rise of meme cryptocurrencies. This discussion delves into the reasons behind the flourishing of memecoins. Let’s go deeper into the appeal of memecoins.
The Psychology Behind Meme Coins
Meme coins are cryptocurrency tokens that are solely inspired by images and memes sourced from the internet. They lack any solid foundational elements and are essentially a visual representation without any intrinsic value.
The mass production of memes on the Internet follows certain trends. Memes are often tied to current events or timeless themes like family and work. When challenging news arises, humorous memes provide a lighthearted way to cope with stress and find relief through laughter.
Investing in cryptocurrencies remains a source of stress due to the complexities of new technologies, intricate analysis, and functionality. However, amidst this seriousness, the emergence of a meme coin featuring a whimsical and amusing image adds a touch of levity. With its modest price, investing in such a coin becomes less intimidating. And if the meme coin has shown significant growth in the past, it becomes even more attractive to new investors.
This implies another factor affecting interest in meme coins. Stories about traders who successfully raised their X’s on it are plagued by fear of missing out on an earning opportunity (FOMO).
Anjali Young, co-founder of the community-focused blockchain application development platform Abridged, believes that this feeds the current excitement around meme coins:
“One of the most important things is managing FOMO. There are many ways to deal with this, and the best thing to do is find one that works for you. Some people find it helpful to formulate a buying thesis and stick to it, or invest only what they are willing to lose. It is important to note that with cryptocurrency operating 24/7, it is easy to get caught up in the constant flow of news and trading activity. When you succumb to FOMO, learn a lesson and move on. And then get back to managing that FOMO,” she explained.
The Role of Social Media and Online Communities
Meme coins come up with an idea supported by the internet community or certain people. Whether it’s everyday humor, political views, or charity — meme coins can represent different interests of people, so such projects are considered social.
After marketing on social networks and other online resources, an increasing number of people are learning about the idea of the project. Those who like the idea seek to support it and become part of the community pushing, as it seems, for something more than just an attempt at enrichment. Also, in order to stir up interest in the community and the coin, the founders organize meetings, and discussions, and provide certain privileges for their participants.
The widespread use of social media and the engagement of large user populations have accelerated this awareness-building process. Prominent figures in the media, industry experts, and influential YouTubers, who hold sway over their audiences, are enlisted to champion the project and its coin. This approach has led to a growing community of coin holders who actively advocate for and propel the coin’s success.
Meme Coins vs Traditional Investments
The main difference between meme coins and traditional crypto market investments is their transparency and simplicity. They do not carry the fundamental foundations and revolutionary technologies. On the contrary, they represent a simple transaction that is understandable to the investor. An uncomplicated but promising asset with a share of humor – as a breath of fresh air for an investor loaded with a complex market. The meaning of meme coins is simple: these are speculative assets, the value of which depends mainly on community participation and Internet trends. Their creators are open to risks and adhere to the speculative nature of coins, rather than hiding them behind technical details.
Since the main drivers of meme coins are viral trends and the support of the community and famous people, to understand them, you should shift the focus to trends and moods, and not to solid foundations, unlike conventional cryptocurrencies. Approval on social media can lead to their value growing rapidly, although often this effect is short-term.
This means that meme coins are very risky investments. Although they can bring great profits in a short time and attract many users, the market can also collapse in a short period. And then take off again at the next mention, as happened with DOGE.
Case Study: Doge
As a joke and an attempt to ridicule big cryptocurrencies in 2013, the first meme сoin appeared — Dogecoin — featuring the popular Shiba Inu dog meme. But after Elon Musk mentioned Dogecoin on his Twitter account, the cost of it increased significantly in a few hours. After that, the community announced Mask as the informal general director of the project. And the price of the coin rose at each of his mentions of it in his account. The hype around the coin was also fueled by Snoop Dogg, who expressed interest in this token.
But it didn’t stop there either. Elon Musk said that Dogecoin can be used to pay for purchases at Tesla, Starlink, Starship, SolarRoof, as well as at electric vehicle gas stations as a means of payment. As a result, Dogecoin grew almost 4,000 times and entered the top ten world cryptocurrencies with the largest capitalization.
After that, meme coins ceased to be perceived by the crypto community as a joke, becoming a real investment tool.
The pump-up of Dogecoin based on the bull growth of cryptocurrencies in 2021 bumped the phenomenon of meme coins in the crypto market. This led to an influx of a number of new market participants who wanted to catch the wave. A lot of meme coins began to appear, the cost of which grew from only one tweet by Elon Musk.
Conclusion
After considering the features of meme coins, it becomes clear that their main distinguishing features, as well as the psychological aspect, help them overcome time. Being socially oriented, funny tokens are understandable for newcomers and regulars of the market. And the possibility of quick profit attracts investors even more.
Since the popularity of meme coins, it is worth thanking social networks. The participants promote projects and increase their volatility. However, you should remember that investing in meme coins is very risky, and its price can quickly collapse as well as skyrocket.