Will memecoin be the best choice for investors in 2023?
Data Source: Meme Token Dashboard
Memecoins and investing are not words that are often seriously discussed together.
However, in a year into a bear market, memecoins like Shiba Inu and Dogecoin have not only survived but performed as well as many"serious"Cryptocurrency projects that are as good, if not better.
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While one also has to be aware of land mines like even the largest memecoins have huge whale influence, are memecoins a positive force for retail investors in 2023?
Footprint Analytics withAlexander of PointsVille, Founder of HumbleHedgeDAOXanderand ICHI's community leadersPetertogether, intwitter spaceThere was a discussion.
1. Memecoin is investor-friendly
Cryptocurrency traders need volatility; volatility is what makes trading such a valuable market. And none is as volatile as a so-called memecoin, or a meme-based token that lacks utility. (However, this definition has to be revised, and there are now several memecoins building utility).
"Anytime Elon Musk posts a picture of a dog, that guarantees a 10% return on a pile of memecoins,"Alex said, adding that it doesn't matter whether you think it's a good thing or a bad thing.
"The free market doesn't care about our opinions. And the [memecoin market] is the freest market that exists. A memecoin has almost no utility - it's the nature of the free market for something so volatile."
In many ways, memecoins are similar to luxury goods, like sneakers, where the price is not tied to utility, but to hype.
"Value aligns well with market sentiment,"Sander said.
"How does something that has no utility gain value? With mood changes. And you have people in the field who know how to harness emotions. This is marketing, pure marketing. It doesn't make rational sense, but markets don't need rational meaning."
2. A memecoin that goes beyond meme
Before FootprintCovered Shiba Inu's Ecosystemimage description
Price & Trding Volume of SHIB-Meme
Many memecoins also feature charitable donations as a core part of their utility.
"Even if we classify them as memecoins, if you look at Shiba's progress, they're pretty much from memecoin to concept to doing things with Shibarium,"Peter said."I think if you have a team that is very loyal to the company and they start building it, you can actually get out of that memecoin space and have a real use case. This will be a game changer - from a memecoin to a real company."
Memecoins are still pretty good at grabbing attention, which is great in times of bull markets and high volatility. Traders are interested in both upside and shorting the coin. However, for long-term preservation of value, the pursuit of building utility is necessary.
"Shiba Inu is trying to do quite a lot with an NFT marketplace. Memecoins are used for humanitarian things, which can attract attention. If some organization, foundation or independent group further invests in some community or infrastructure, the infrastructure can have the ability to provide other services,"Alex said.
"For me personally, the ones that make the most sense are video games. In my opinion, these are the closest things to memos and transactions. The concept is to maintain this kind of community, beyond trading, during a bear market, or when volatility is low and the market is boring. P2E makes sense for something like Dogecoin, which has no cap and keeps creating tokens."
3. Trading memecoins requires accepting waves from big players
The top 100 wallets holding DOGE hold 70% of the total supply.
It's just the reality of this space. Luckily, whales are rational actors in a free market - which means that random throwing of all their holdings is unlikely. The growth of the community will also board the new liquidity.
However, traders should understand this dynamic.
"I think most traders know that whales make waves and they are trying to ride them, follow in their footsteps, and make a profit. Experienced traders understand that this is how you roll,"Alex said.
"You're navigating the distance between liquidity levels in the market, Xander added.
"When it comes to speculative trading, this is your only protection, other than possibly information you know. Whales need to protect their interests [not to dump. ] Protection is what drives the free market, so if you want to protect yourself, learn how the free market works."
4. Memecoin helps users enter the crypto circle
The blockchain space is full of incredibly dense jargon and technical developments that can scare off newcomers. However, memecoins still operate along the core premise of cryptocurrencies - decentralization and self-custody of value.
"They are easy to understand and in most cases,"Xander said."You can still exchange them for value - you can send them anywhere in the world without a middleman."
"I think it's really cool in the cryptocurrency space that we have these simpler coins that are easy to interact with. As a ramp, these commemorative coins work because not much is known about them - although SHIB is breaking the mold. You don't need to read DOGE's white paper."
Peter also added that memecoins “provide a transition into the space for those who don’t know much about cryptocurrencies.”
"Everyone has heard of Bitcoin; it's pretty much old school stuff. But they see these commemorative coins, and they have these interesting pictures, and they stand out. This is good marketing for cryptocurrencies to the common man."
"The Footprint Community is a global, mutually supportive data community where members leverage data visualizations to co-create communicable insights. In the Footprint community, you can get help, establish links, and exchange learning and research about blockchains such as Web 3, Metaverse, GameFi, and DeFi. Many active, diverse, and highly engaged members inspire and support each other through the community, and a worldwide user base is built to contribute data, share insights, and drive the community forward."
This article comes fromFootprint Analyticscommunity contribution.
The Footprint Community is a global, mutually supportive data community where members leverage data visualizations to co-create communicable insights. In the Footprint community, you can get help, establish links, and exchange learning and research about blockchains such as Web 3, Metaverse, GameFi, and DeFi. Many active, diverse, and highly engaged members inspire and support each other through the community, and a worldwide user base is built to contribute data, share insights, and drive the community forward.
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