Within hours of Elon Musk changing his X handle to “Cecius Maximus” (a reference to a previously unknown cryptocurrency) on New Year's Eve, its value soared 4,800%, giving it a market capitalization of 300 million yen. It reached $80 million.
It's just that the latest so-called meme coins (cryptocurrencies based on memes and cultural events such as Dogecoin, the Shiba Inu, and Pepe the Frog) soared, only to then fall (or tank entirely) over seemingly inevitable problems. did. Hours and hours.
Some skeptical financial experts have called memecoins a Ponzi scheme, arguing that they have no underlying value and attract people with little financial experience who lose money.
But smart small investors and investment funds aren't writing it off right away, pouring millions of dollars into this space and reaping impressive returns in doing so.
The meme coin sector is estimated to surge from a value of $20 billion in January 2024 to more than $120 billion by the end of 2024, according to market analysts.
Laurent Parmentier, a partner at Stratos, a cryptocurrency investment fund backed by Andreessen Horowitz, told the Post that the memecoin-focused investment fund he launched in 2023 would dwarf traditional investments. He said that it is becoming more and more.
“I think we're just going to see more and more sophisticated investors… Cryptocurrencies are the best-performing asset class in the world, and memecoins are the best-performing subsection,” Parmentier said. said.
Citing one of the best-performing traditional stocks of 2024, he said, “NVIDIA's returns pale in comparison to the returns of getting into some of the meme coins early…We have a 300x return. We made a profit,” he added.
Parmentier said meme coins are a way to celebrate and bring more attention to cryptocurrencies and their culture, and as long as investors choose the right coins, they can be rewarded for doing so. explain.
“Why don't you think about how you can economically benefit from peanuts?” [a reference to a meme coin based around a New York State pet squirrel who made headlines after being forcibly removed from his owners and destroyed]would have made a lot of money,” Parmentier added.
Alden Borthwick, an undergraduate student at New York University who has invested in memecoins, explained that the quick returns they generate are particularly appealing to his generation. ”
“But with enough time and effort, someone can make a lot of money by issuing new coins,” he explains. “Providing true agency to the average investor.”
And there are quite a few mind-boggling stories to illustrate this point. One person who invested just $66 in Kekius Maximus saw his investment grow to nearly $3 million. They sold $201,000 worth and kept $2.85 million. According to Cointelegraph.com
The first popular meme coin, Dogecoin, was created in 2013 and featured the Shiba Inu, which was a popular meme at the time. Initially seen as a satire on Bitcoin and other cryptocurrencies, Bitcoin's value skyrocketed after Musk started posting about it. Since then, it has maintained its value and become one of the more stable cryptocurrencies.
Creation of the Ministry of Government Efficiency [DOGE] — A subtle nod to Dogecoin — The memecoin led by Musk and Vivek Ramaswamy has officially entered mainstream society.
And coin watchers say this is evidence of a link between memes and cryptocurrencies, predicting that the election of Donald Trump, the most pro-crypto president in history, will cause digital currencies to soar in the coming months. There is.
“Nobody realizes how important it becomes in the cultural zeitgeist,” Borthwick added. “So many large investors think, 'This is stupid, all retail investors are going to lose all their money,' but I think this has the power to inform culture. ”
Tor Bautista, a crypto analyst at GSR Research, cautions that the overwhelming majority of bets on meme coins are pure speculation, but 2024 has been a strong year for some of the most popular cryptocurrencies. We are also looking at how people are engaging with and interested in crypto culture based on value. The currency soared, with Bitcoin at one point worth more than $100,000 per coin.
“When Bitcoin goes up, meme coins go down even more.” [the chain, with more risk] Please step up,” Bautista added. “Investors are selective about what they think the future will look like, and capital is following that.”
Of course, there are far more losers than winners when it comes to meme coins.
One infamous example of a meme coin disaster is the so-called Hawktua girl Hayley Welch's “$HAWK token,” which became famous after her video clip went viral last summer.
The coin soared to $490 million on launch day, but fell to less than $100 million within minutes. Just a month after its release in December, it has a market capitalization of just $39,760, making it virtually worthless.
The coin's development team is currently facing increased scrutiny from the Securities and Exchange Commission and a class action lawsuit from angry investors who lost money and felt cheated.
Other investors say meme coins could be combined with artificial intelligence to become an entirely new type of currency. One of the more recent AI-generated meme coins, GOAT, reached a market cap of $800 million in November, just weeks after its launch.
Cortland Lear, founder of Plastic Labs, the company whose technology inspired the viral meme coin, told the Post that the attention these cryptocurrencies are generating is a sign that the industry will survive. He said it shows.
“Capital chases attention,” he explains. “Something gets stuck, and that becomes the seed for the next cycle.”
This article is part of a new editorial series called NYNext, which focuses on innovation across various industries in New York City and the people leading the way.
