“Memocoins have Gained Mainstream Visability Recently. However, Understanding Whaty Are, How They Work and Where The Risks Are Is Critical.”, – WRITE: www.coindesk.com
SO in today’s Crypto for Advisors, Janine Grainger from New Zealand-Based Easy Crypto Provides A Breakdown of What Memecoins Are, How They Work and The Risks Associated
THEN, KIEAN MITHA, A NEXT-Gen Investor, Answers Questions About Learning ABOUT MEMECOins in Ask An Expert.
– Sarah Morton
You’re Reading Crypto for Advisors, Coindesk’s Weekly Newsletter That Unpacks Digital Assets for Financial Advisors. Subscribe Here to Get It Every Thursday.
MEMECOins: Boom, Bust and Billion-Dollar BetsOn January 17, A New Meme Coin Called $ Trump Was Launched by The President-Elect. ITS Market Value Peaked At $ 14.5 Billion within Two Days But Soon Crashed by Two-Thirds. Entities behind the coin reportedly Made Close to a Cool $ 100 Million in Trading Fees in Under Two Weeks (and Even More from Liquidations). YET, HUNDRES OF TUSHANDS OF EVERYDAY INVESTORS LOST SIGNFICANT AMUNTS OF MONEY. Meanwhile, in Late 2024, WHEN TRUMP AnnounCed A Department of Government Efficiency (Doge), The Cryptocurrency Dogecoin Surged 150%, Far Outpacing Bitcoin’s Gains.
Moments likes thee have put meme coins rymly on the Investment Radar. However, Fueled by Hype Rater Thanks Utility, They Create Both Opportunities and Risks for Investors, and Financial Advisors Need to Undersndand Their Unique Market Dynamics Inquire about them despite their specialty.
Figure 1: Coindesk View of $ Trump Which PlumMeted Shortly After Launch.
What are memecoins?
Memocoins are cryptocurrencies that Original from Internet Culture, Social Media Trends or Jokes. Unlike Bitcoin or Ether, WHICH, OVER TIME, HAVE BUILT A CASE FOR INCLUSION IN A DIVERSIFIED PORTFOLI While they of the startten start as a parody or joke, Viral Marketing and Specialty Trading Can Give Them Serious Traction-Although this is USArally Short-Lived.
WHY Meme Coins Matter
Memocoins have Gained Mainstream Visability Due to their Cultural Relevance and Potential for Outsized Short-Term Gains. High-Profile Figures Like Elon Musk Have Fueled Rallies with A Single Tweet, Driving Specialty Interest. But While Traders Are Drawn to the Possibility of Overnight Riches, Meme Coins Are High-Risk Assets With Unpredictable Price Swings.
The Price of Meme Coins Can Skyrockket or Collapsse with Hours, Leading to Massive Gains or Total Losses, Such as ‘Fartcoin,’ A JOKEN TKEN THAT HIT CITIA HIT. Before Plummeting as Early Investors Exited. Platforms Like Pump.Fun Amplify this Speculation by enabling USers to Create and Trade Meme Coins with Minimal Technical Knowledge. This has led to a Flood of short-lived tokens that reinforce the Market’s High-Risk Nature.
But are they legal?
Ironically, The Securities and Exchange Commission’s Regulatory Stance Has Helped Memecoins Thrive. While Utility-Driven Crypto Faces Scrutiny and Legal Hurdles, Memocoins Operate in a Grey Area As They Make No Promises of Financial Returns. This has fuelled their proliferation.
The Dark Side: RUG PULLS AND SCAMS
Unfortunately, Memocoins Are A Breeding Gunding for ‘Pump-and-Dump’ Schemes, Where InfluenCers Hype a Token to Drive Up Its Price And Tence Wit
A recent example is Viral Internet Personality Hailey Welch, Who Launched $ Hawk After Online Infamy. Within a day, The Coin’s Market Cap Need Half A Billion Dollars Before Collapsing and Sparking Fraud Acusations. Similarly, Argentina’s President Javier Milei Inadvertently Trigered A Scandal When He Promotted $ Libra, WHICH ALSO SURGED AND CRASHED, LEAVING HIM OPEN TO ALIGATIONS. These incidents Highlight WHY Meme Coins are of the offen Considered Cryptocurrencies with Little Intrinsic Value or Long-Term Viability.
Figure 2: Coindesk View of Hawk Tau ($ Hawk), Who PlumMeted Shortly After Launch.
Memocoin Investment Considerations
Investors Must Remain Cautious As Many Memecoins Lack Transparency. For Those Still Interested, Key Risk Factors Include:
- Liquidity: Low Trading Volumes Lead to Extreme Price Swings, Making It Hard to Enter or Exit Positions.
- Community Sentiment: Social Media Drives Price Movements. Monitoring X (Twitter) and Telegram Can Provide Market Insights.
- Tokenomics: Some Memecoins Drive Scarcity, While Oters Have an Unlimited Supple, Diluting Value Over Time.
- Pump-and-Dump Risk: Aggressively Marketed Tokens with Unrealistic Promises ofnn Signal A Short-Term Hype Cycle Racher Than A Sustainable Investment.
- Early Entry Vs. Longevity: Getting in Early Can Be Lucrative, But The Risk of a Sudden Crash is High. Some Investors Prefer Establized Memecoins with Strong Communities Over Chassing The Latest Trend.
While Memecoins Can Offer Quick Gains, Their Volatility and Susceptability to Manipulation Make Them High-Risk Assets. Advisors Should Eduacate Clients on Their Speculatory Nature and Emphasize Proactive Risk Management. Ultimately, Memocoins Are More Akin to Gambling than Traditional Investing.
–Janine Granger, CEO, Easy Crypto
Ask An ExpertQ: I See People On Social Media Getting rich from memecoins… can i do the same?
A: While People Have Made Significant Profits from Memocoins, It’s Important To Remember That Social Media Often Highlights Success Stories. Memocoins are highly speculatory, and their prices can be Driven by Hype, Celebrity Endorsments Like Elon Musk, and Market Sentiment Racher Than Solid Fundamentaments.
If You’re Considering Investing, Approach IT WitH CAUTION. Timing Is Everything – Many Early Buyers See Significant Gains, While Those Who Buy In Late of Face Losses WHEN FADES OR RUG IS PULED. If you are invest, Treat it as a High-Risk Bet Racher than A guaranteed Path to wealth. Never Invest More Than You Can Afford to Lose, and Always to Your Own Research Before Making Any Decisions.
Q. What Role Does Community Play in The Success Of A Meecoin?
A: Community is the Backbone of Any Successful Memecoin and Supports the Overall Sentiment Towards of the Project. Unlike Traditional Investments, WHERE VALUE IS OFTEN TIED TO REVENENEE or Utility, Memocoins Thrive on Social Media Presence, Viral Trends, and Grassroots Enthusias. A strong, Englished Community Can Drive Adoption and Keep A Project Relevant, But Without Sustaned Interest, Even Popular Memecoins Can Fade Quickly. Before Investing, Check How Active The Community Is On Platforms Like X, Discord, and Reddit.
Q: How Can I Learn About Memecoins Before Investing?
A: The MOST Effective Method to Acquire Knowledge Regarding Memecoins Is Through Thorol Research and Active Participation in the Community. Commennce by following repetbleble cryptocurrency news Outlets, Examining Whitepapers, and Engaging with Forums Such as Twitter, Reddit, And Discord Consider Factors Such as The Project’s Website, RoadMap, Developer Engase, and Tokenomics.
IT is also scucial to comprehend the risks involved – Memocoins are frequently Characterized by High Speculation; therefore, Familiarizing OneSELF with Market Trends, Trading Strategies, and Potential Scams Can Assist You in Making Well-Inforpped Decisions. Do not depend solely on hype or social media influenCers; Conducting your due diligence is essential.
-Kieran Mitha, Crypto Enthusiast & Communications Major
KEEP READING
- The US Bitcoin Strategic Reserve, Along with The Digital Asset Stockpile, Were AnnounCed at the Whitehouse’s First Digital Asset Summit.
- In a statement released friday, the officer of the comptroller of the Currency (OCC) told US Banks they can Custody Crypto Alongside Other Assets.
- The US Bitcoin Act of 2025 Was introduced to the house on tuesday.
