What Is a Memecoin?
Memecoin is a type of cryptocurrency that draws inspiration from memes and was created as a more affordable alternative to Bitcoin.
The first memecoin, Dogecoin, was based on the famous Shiba Inu meme. Other popular memecoins include Dogelon Mars, Shiba Inu, Floki Inu, and Samoyedcoin.
The Memecoin Boom
Initially, memecoins were not taken seriously in the world of crypto trading and were seen as a joke.
However, when Elon Musk started endorsing Dogecoin through his tweets, it gained unexpected momentum.
The value of Dogecoin skyrocketed overnight.
In addition to Musk, other influential figures like Snoop Dogg and Mark Cuban also expressed interest in memecoins, further boosting their popularity.
Rise of Memecoins
Within a few months, memecoins secured their place in the top 10 cryptocurrencies by market capitalization.
By the end of 2021, Shiba Inu, another popular memecoin, made its way onto the top 10 list.
The growing status of memecoins was attributed to the fear of missing out (FOMO) that arises when interest peaks, leading traders to participate in the rally to book profits.
Dogecoin and Memecoin Craze
As the GameStop frenzy ended, traders sought new obsessions, and Reddit became a hub for memecoin discussions, especially after endorsements from billionaires.
Dogecoin, which was created in 2013 to challenge Bitcoin by being cheaper and having a larger supply (around a quadrillion coins), gained traction.
Memecoin Boom and Retail Investors
Another aspect of the memecoin boom is that it provides an opportunity for retail investors to maximize their small investments.
Bitcoin’s increasing value makes it less accessible for small investors and new traders.
Earlier this year, Dogecoin surpassed the market value of giants like eBay and Kraft Heinz.
What Do Memecoins Offer?
According to Nasdaq, memecoins currently serve primarily as a means to make money and have yet to offer real-world utility like Ethereum and Bitcoin.
If the current endorsements by Musk and other influencers continue, memecoins may still provide short-term benefits for traders.