Meme coin traders, hold your seats. According to a recent publication by Binance Research, 97% of meme coins are already dead with almost $0 of trading volume.
This re-echoes the sentiment on the fickle nature of most meme coins. Despite their high potential for outsized returns due to their rapid growth and speculation, they remain a very risky asset class with a high risk of losses because of their strong reliance on market sentiment and lack of fundamental valuation support.
Joshua Wong, author of the research said “The emergence of memecoins is the result of a sophisticated, technology-driven ecosystem comprising cryptography-powered validator sets, distributed ledgers, decentralized applications, and wallet interfaces.”
Wong added:
As we explore the humorous and whimsical world of meme coins, it is important to remember that without the technological progress achieved over the past decade, the very decentralized digital substrate that has given life to today’s diaspora of meme coin flora and fauna would not exist.
Why are meme coins still growing despite obvious risks? Meme coins mirror the mentality of the average crypto trader, prioritizing financial gains with less focus on the benefits of blockchain technology. This can be seen in the market share meme coins currently hold.
When measured as a proportion of the overall market capitalization of cryptocurrencies less bitcoin (BTC) ethereum (ETH), and stablecoins, the combined market valuation of meme coins has nearly tripled since 2022, rising from 4% to 11% by 2024. However, it is important to note that this ratio is smaller than it was in 2021, when DOGE and SHIB had their market capitalizations soar to over $80 billion and $39 billion, respectively.
Market participants are drawn toward meme coins due to certain attributes such as fair launches, accessibility, reliability, and transparency with different tokenized ideas and narratives appealing to different types of consumers.
In the long term, it will be vital for meme coins to develop and sustain distinctive stories and concepts that appeal to a sizable enough user base, as this will be a necessity for the most prosperous meme coins.
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