- Meme coin hype fueled by PEPE’s massive price rally sends capital rotating into small market capitalization tokens like Chad Coin, Shib Original Vision.
- Experts argue that the meme coin price rally is a micro-bubble, the risk is extraordinary when compared to the rest of the crypto market.
- Dogecoin, Shiba Inu and FLOKI struggle to keep up with the gains of new meme coins.
Meme coins have made a comeback with massive price rallies in PEPE, Chad Coin (CHAD), Shib Original Vision (SOV). Experts argue that the recent gains in meme coins are likely unsustainable and these projects represent a micro-bubble in crypto, where the risk is exceptionally high compared to other tokens in the ecosystem.
Also read: MATIC price recovery catalysts to watch out for in Polygon ecosystem
Meme coins: The next big narrative or fad?
Meme coins, projects influenced by an internet meme have become increasingly relevant with the popularity of PEPE, CHAD and SOV. The rotation of capital from Bitcoin and altcoins to meme coins catalyzes price rallies in such projects.
Despite massive gains, meme coins are a highly debated category of tokens for the risk involved. Cole, a crypto expert and a market maker at Eigen Protocol describes meme coins as “micro bubbles.” A micro bubble is a group of tokens with extraordinary risk compared to other projects within the overall market.
Micro-bubbles like the ongoing meme coin craze seem like they either end with the broader market rugging to zero or onboarding hoards of participants that start a bigger vapor bubble
— Cole (@cole0x) April 23, 2023
While PEPE, CHAD, SOV and other meme coins have yielded massive gains for holders the market capitalization is relatively small when compared to Dogecoin, Shiba Inu and others and this reflects on the relatively small liquidity for holders of these tokens.
Meme coin gains are likely unsustainable
Experts argue that meme coins are an avenue for “DeFi degenerates” or the group of people chasing gains in crypto, at a relatively high risk compared to other market participants. @00forrest, a crypto trader shared his journey to 6x gains in one such meme coin project that had no website, no Twitter handle and simply deployed a contract on Etherscan.
The expert explains that he caught the project early and earned 6x gains from it, without revealing the name for fear of crypto Twitter traders aping into it and losing funds.
Pretty sure I just burned $200 on a $30k market cap memecoin.
— forrest.y00tstreet.eth (@00forrest) April 24, 2023
0 research, just degeneracy.
Why meme coin rallies are important and critique from experts
It's important to note that massive rallies in meme coins generally signal the beginning or end of a crypto market trend. A bull run in crypto is usually preceded by a long period of consolidation. The end of a meme coin rally is typically followed by consolidation before the next leg up in the crypto market.
Experts have warned traders to be cautious when trading in meme coins. Binance CEO Changpeng Zhao warned traders on crypto Twitter against pouring capital in meme coin projects without performing due diligence.
Altcoin Sherpa, a crypto expert and trader shares CZ’s views and argues that meme coin price rallies are unsustainable, despite the possibility of 500x gains within a short period of time.
meme coins are mostly rugs, do nothing productive, take 0 effort to make, and are mostly here for the biggest gamblers, degenerates, and plebs in the crypto space...
— Altcoin Sherpa (@AltcoinSherpa) April 18, 2023
and yet they can do something that no 'normal' coin/ $BTC can do- they can go 500x+ in the matter of a few days pic.twitter.com/FCr0khTBEw
New meme coins take the spotlight away from DOGE, SHIB
The arrival of meme coins that yield upwards of 5x gains in a short period of time has shifted traders’ focus away from large market cap projects like Dogecoin, and Shiba Inu. The two largest Shiba-Inu-themed cryptocurrencies in the ecosystem have wiped out their gains from the past week and are currently struggling to recover from double-digit losses.
Large wallet investors on the Ethereum network have scooped up Dogecoin-killer Shiba Inu, signaling a bullish sentiment among traders. Akash Girimath, crypto analyst at FXStreet believes SHIB is primed for 20% gains. The expert argues that SHIB price is tightly wound in consolidation in a range that extends from $0.0000101 to $0.0000117. The meme coin is primed for gains if buying pressure sustains and builds up.
Read more here: Shiba Inu price primed for 20% rally as SHIB seizes opportunity after Dogecoin’s failure
Disclaimer: Please note that most meme coin projects have turned out to be rug pulls and wiped out traders’ portfolios. There is a likelihood that any or all of the rallying meme coins mentioned above are scams and this is not investment advice.
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