Avoid memecoins – they will not fuel the next bull run.
The memecoin market has been growing this year. During this Bitcoin (BTC) half-cycle, cryptocurrency is the only sector that has grown. In some ways, it's reminiscent of GameFi's narrative in The Final Cycle – an event that was predicted before it even began.
However, despite the enthusiasm for memecoins, there is a strong case that they are not the best investment vehicle to ride the bull run. If new investors turn their attention to real assets (RWAs) and artificial intelligence (AI) are more sustainable, it will be more encouraging for the long-term health of the market.
Memecoins are generally designed to be light hearted and fun. You can think of them as the crypto cousins of meme stocks like AMC and GameStop. Some well-known examples of memecoins include Dogecoin (DOGE) and Shiba Inu (SHIB) – which I consider the OG memecoins.
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It's been a long journey since Dogecoin, but the memecoin sector has gotten pretty big in a short amount of time. By March 2024, there were only about 2,000 memecoin projects. Of these, only about 1,000 were liquid, meaning they had more than zero turnover. As of August, there were about 1.7 million tokens on Solana-based memecoin platform, PumpFun.
According to a study released by Binance in June, Mame coins have increased in value by almost 600% year to date. That figure is more than 10 times that of Bitcoin during the same period. A combination of highly speculative activities and famous people behind some of them have contributed to the growth of memecoins. These tokens are also a hot topic on social media: Binance mentions grew by more than 50% in the time frame studied.
Celebrities have contributed using their influence to promote meme coins in their name. Like MOTHER by Iggy Azalea, RNT, Top G by Andrew Tate, JASON by Jason Derulo, Waka Flocka by Flocka, and Timeless Davido by Davido are just a few of the famous memecoins you'll find listed on CoinGecko. I have been an active investor for many years and have invested in some of the top projects in the industry, but like other serious crypto users, I also invested in Jason and Mom – up to $100,000.
Are memecoins sustainable?
Memecoins have attracted the most liquidity in this cycle, prompting the industry to question whether memecoins are a sustainable (or suitable) investment vehicle in the future. The memecoin party is largely fueled by short-term thinking. People are looking for quick investment schemes to withdraw money. While that's not necessarily a bad thing, it does contribute to the fear of missing out (FOMO) in the memecoin scene. This FOMO is one of the big reasons why the memecoin market has seen so much growth.
In the year The average price growth of memecoins in the first quarter of 2024 (over 1300%) was 4.6 times more profitable than the RWAs of the second profitable narrative (which gained just under 300%). I believe this gap will soon be reversed. The blockchain industry cannot grow from the liquidity generated by the memecoin bubble alone. Very few of these signs are profitable. According to a report released in August, 97% of memecoins ever created have ceased to exist, and more than 2,000 of them disappear every month.
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The blockchain industry will only grow from real liquidity catalysts in sectors including RWA and AI. These are sustainable areas that can drive the industry forward. The reasons are simple: with RWA, real assets are being recorded on the blockchain. The AI market will reach $297 billion in 2027, according to Gartner, with a compound annual growth rate of 19.% over the next several years.
While the rapid growth of the memecoin sector is impressive, it is not the sector that is driving the continued liquidity of the industry forward. A tokenization of trillions of dollars worth of real estate, fine art and other valuable collectibles, memecoins will do what memecoins cannot – and bring accuracy, scalability and automation to businesses on the blockchain through AI-powered projects. These are the sectors that will drive the next bull market.
Ivan Lutra is a guest columnist for Cointelegraph and crypto entrepreneur. At the age of 17, he sold his first company, StudySocial, for $1.7 million, and developed more than 30 mobile applications before he turned 18. In 2014, he got involved in cryptocurrency and is currently building CasaNFT. He has invested in more than 400 crypto projects.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
