Meme Coin Investing: Are Meme Coins Still A Good Investment In 2024?

Love or hate them, meme coins are an integral part of the crypto market today. The humorous and light-hearted themes of these tokens are always a big attraction for the wider crypto community. While most meme coins serve as speculative trading currencies for short-term trading, some like Dogecoin, Shiba Inu, and BONK have evolved into utility-driven digital assets.

By July 2024, the overall meme coin market is worth just over $55billion, and they’ve been a major part of the bullish cycle this year. In this article, we will shed light on these speculative digital assets, their history, risks, and how one could become an effective meme coins trader with the right strategies. Let’s dive in.

Key takeaways

• Meme coins like Dogecoin and Shiba Inu started as jokes but gained popularity due to strong communities and social media hype.
• The market exploded in 2020/21 with endorsements from celebrities like Elon Musk.
• Newer meme coins like Pepe, WIF, BOME, and BONK are adding innovative features.
• Political meme coins themed around the US election are the latest trend in the market.
• Investing in meme coins is highly speculative and volatile, often driven by trends and community sentiment.
• Celebrity-endorsed meme coins have fallen flat in June 2024. 
• Practical investment strategies include monitoring social media, diversifying portfolios, researching thoroughly, setting clear goals, and staying informed about regulations.

History and popularity of meme coins

Early beginnings: Dogecoin’s inception

The meme coin phenomenon began with Dogecoin (DOGE), created in December 2013 by software engineers Billy Markus and Jackson Palmer. Originally intended as a joke, Dogecoin was based on the popular ‘Doge’ meme featuring a Shiba Inu dog.

The creators wanted to create a fun and friendly cryptocurrency, differentiating it from the more serious Bitcoin. Despite its humorous origins, Dogecoin quickly gained traction due to its active community and widespread online presence. Fast forward 11 years, DOGE is now the largest meme coin in the market and the ninth-largest cryptocurrency overall with a $19.5bn market cap.

Mid-2010s: Gaining traction

During the mid-2010s, Dogecoin’s community-driven approach led to numerous charitable events and sponsorships, such as funding the Jamaican Bobsled Team’s trip to the 2014 Winter Olympics and supporting clean water projects in Kenya. These initiatives helped Dogecoin gain mainstream recognition and ultimately influenced a loyal following.

Late 2010s: Expansion and market influence

The late 2010s saw Dogecoin being listed on various cryptocurrency exchanges, increasing its accessibility and trading volume. By 2017, the broader cryptocurrency boom significantly boosted Dogecoin’s market cap, drawing attention to the potential of meme coins as viable investments. Despite market fluctuations, Dogecoin maintained its popularity, largely due to its active and supportive community.

2020/21: The meme coin explosion

The meme coin market exploded in 2020 and 2021, driven by social media hype and endorsements from high-profile individuals like Elon Musk. Shiba Inu (SHIB), launched in August 2020, positioned itself as the ‘Dogecoin killer’, leveraging the Doge meme while offering additional features like ShibaSwap, a decentralized exchange. SHIB quickly became a favorite among investors, achieving a multi-billion dollar market cap within a year.

2022-2023: Diversification and new entrants

Following the success of Dogecoin and Shiba Inu, numerous meme coins entered the market, each with unique themes and features. Coins like Akita Inu (AKITA), Kishu Inu (KISHU), and Floki Inu (FLOKI) capitalized on the ‘Inu’ trend, each building strong communities and innovative use cases. The meme coin frenzy also led to the creation of tokens with no inherent utility but massive speculative value, such as Pepe (PEPE) and Dogwifhat, which gained popularity through viral marketing campaigns.

2024: The rise of Solana meme coins 

The first half of 2024 was all about meme coins, particularly Solana-based meme coins. Bitcoin’s bull market due to the SEC’s ETF approval and launch saw large transactions around altcoins, where meme coins dominated the bulk share of the market activities.

This booming market of H1 2024 provided an opportunity for more tokens to enter the market and capitalize on the hype. Solana was the perfect platform for new emerging tokens, given the blockchain‘s high scalability, accessibility, and low transaction fees. There are also several launchpad platforms established around the Solana blockchain, which made it easy for new meme coins to enter the market with limited effort.

As a result, Solana meme coins skyrocketed in the first half of 2024. New tokens like Book of Memes (BOME), PONKE, and GIGA saw over 10,000% gains this year, while other popular tokens like BONK and WIF reached new all-time highs.

US election meme coins: Trump, Biden, Harris and many more 

A notable trend in the meme coin market this year was election-themed coins. As the US election is set to unfold by the end of this year, memers took the opportunity to create parody tokens of the Presidential candidates and cash in on the meme coin craze. And, unsurprisingly, it worked.

A meme coin called MAGA (TRUMP), themed around Donald Trump’s ‘Make America Great Again’ slogan, increased by nearly 50,000% since its launch in October 2023. Another parody token called ‘Doland Tremp’ has gained over 600% since its launch in March this year. The token rallied after the latest assassination attempt on the former President in July 2024, which saw his popularity increase significantly, even in the crypto space.

Along with Trump, meme coins themed on current US President Joe Biden also trended throughout the year. BIDEN token made impressive gains in early March and April but crashed as soon as Joe Biden withdrew from the presidential race. As the current VP Kamala Harris announced her candidacy, another parody token called KAMA skyrocketed over 3,000% in less than a month. This election-themed meme coin trend will likely continue throughout the year as the election season rolls on.

Risks and volatility of meme coins

Meme coins, while potentially lucrative, come with significant risks and volatility. Their value is often driven by social media trends and community sentiment rather than intrinsic utility or technology. This reliance on hype makes meme coins highly susceptible to price manipulation and sudden market crashes

Take the case of Solana meme coins in recent months. In April, at least 12 Solana-based meme coins that raised $26.7m in presale a month ago, were completely abandoned.

Also, celebrity-themed meme coins on Solana lost over 90% of their value in June. Even industry leaders like Ethereum‘s Vitalik Buterin called out on the speculative nature of these tokens.

The speculative nature of meme coins attracts both novice and experienced traders looking for quick profits. However, this speculation can lead to dramatic price swings. Additionally, meme coins often lack fundamental analysis or substantial technological innovation, making them more prone to being affected by market rumors and investor behavior. The absence of solid use cases or clear roadmaps can result in these coins losing their value rapidly once the initial hype fades.

Regulatory uncertainties also pose a risk, as governments and financial authorities may impose restrictions or bans on meme coins, further affecting their volatility and marketability. Investors must conduct thorough research and exercise caution, understanding that meme coins can offer high rewards but also carry the potential for significant losses.

Factors influencing meme coin prices

• Community and social media hype: Meme coins like Dogecoin and Shiba Inu thrive on community engagement and social media activity, driving price movements through viral trends and influencer endorsements.
• Celebrity endorsements: Endorsements from high-profile figures, such as Elon Musk’s tweets about Dogecoin, can cause significant price surges or declines based on public reaction.
• Market speculation: The speculative nature of meme coins attracts traders looking for quick gains, leading to high volatility as large buy or sell orders can drastically impact prices.
• Technological developments: Introduction of new features or enhancements, such as Shiba Inu’s ShibaSwap, can influence investor confidence and drive price changes.
• Regulatory news: Announcements regarding cryptocurrency regulations can affect investor sentiment and meme coin prices, either positively or negatively depending on the nature of the regulation.
• Market trends: Broader market trends in the cryptocurrency space, including Bitcoin’s performance, often impact meme coin prices due to the interconnectedness of crypto assets. 

Potential benefits of investing in meme coins

• High return potential: Early investments in meme coins like Dogecoin, Shiba Inu, BONK, and dogwifhat have yielded substantial profits for many investors.
• Community engagement: Strong and active communities can drive price increases through coordinated efforts and viral marketing.
• Low entry barrier: Meme coins often have low prices, allowing new investors to enter the cryptocurrency market with minimal financial commitment.
• Innovation and fun: Meme coins frequently introduce unique and humorous concepts that can make the investment experience enjoyable.

Potential drawbacks of investing in meme coins

• High volatility: Prices can fluctuate dramatically based on social media trends and market speculation, leading to significant financial risk.
• Lack of fundamental value: Many meme coins lack intrinsic utility or technological innovation, making them prone to losing value once the initial hype fades.
• Market manipulation: The speculative nature of meme coins makes them susceptible to price manipulation by large holders or coordinated groups.
• Regulatory risks: Changes in cryptocurrency regulations can negatively impact meme coin prices and their marketability.

Assessing market trends and sentiments

To successfully invest in meme coins, it is crucial to assess market trends and sentiments accurately. Start by monitoring social media platforms like Twitter, Reddit, and Discord, where meme coin discussions often gain momentum.

These platforms can provide insights into community sentiment and upcoming trends. Utilize tools such as Google Trends to gauge the popularity of specific meme coins over time. Analyzing the volume and frequency of mentions can help predict potential price movements.

It is also essential to stay updated with cryptocurrency news and market analyses from reputable sources like Cointelegraph and CoinDesk. These platforms offer expert opinions and data-driven insights that can aid in understanding broader market dynamics.

Engaging with the community through forums and attending cryptocurrency events can provide additional perspectives on market sentiment. Tracking large transactions and whale movements, often reported on blockchain explorers like Etherscan, can indicate significant market shifts and investor confidence.

Strategies for investing in meme coins

Investing in meme coins requires strategic planning and risk management. Start by diversifying your portfolio to mitigate risk. While meme coins can offer high returns, they are highly volatile, and diversification can help balance potential losses. Consider allocating a smaller percentage of your investment portfolio to meme coins, keeping the majority in more stable assets like Bitcoin or Ethereum.

Research thoroughly before investing 

Analyze the project’s white paper, team credentials, and roadmap. Look for transparency and regular updates from the development team. A strong, active community can be a positive indicator of a project’s potential success.

Set clear investment goals and exit strategies 

Decide in advance the profit margins at which you will sell your holdings to avoid being swayed by market emotions. Utilizing stop-loss orders can also help protect your investments from sudden downturns. Regularly review and adjust your investment strategy based on market conditions and personal financial goals.

Be aware of the regulatory developments

Cryptocurrency regulations can vary significantly by region and can impact meme coin investments. Staying informed about potential regulatory changes can help you make timely decisions to safeguard your investments.

By following these practical steps, investors can navigate the meme coin market more effectively and capitalize on potential opportunities while managing risks.

Frequently Asked Questions

1. 01.

   Do meme coins have a future?

   

   Yes, meme coins do have a future, though their longevity and success will depend on various factors. Initially dismissed as jokes, meme coins like Dogecoin and Shiba Inu have demonstrated significant staying power due to strong community support and social media influence. Recent developments have seen meme coins integrating more utility, such as Shiba Inu’s ShibaSwap and plans for decentralized financial applications. However, their future will remain highly speculative and reliant on continued community engagement and adoption of practical use cases.

2. 02.

   Is it worth buying meme coins?

   

   Buying meme coins can be worth it for some investors, but it comes with high risks. Meme coins are highly volatile and their value often depends on social media trends and public sentiment rather than intrinsic technological value. Investors can potentially see high returns, as evidenced by the dramatic rises of Dogecoin, Shiba Inu, and BONK. However, due to their speculative nature, it’s essential to do thorough research and consider diversifying investments to mitigate risk. Only invest money you can afford to lose, and be prepared for significant price swings.

3. 03.

   Can you make money off meme coins?

   

   Yes, it is possible to make money off meme coins. Many early investors in Dogecoin and Shiba Inu saw substantial returns as these coins gained popularity and market value. Meme coins can experience rapid price increases driven by social media hype and community support. However, making money off meme coins requires careful timing and a high tolerance for risk. Their prices can be extremely volatile, and significant gains can be followed by steep losses. Therefore, success in meme coin investing often involves strategic buying, clear exit plans, and constant monitoring of market trends.