Could Bitcoin ETF Approvals Cause Memecoin’s Bull Run?
The market has reacted positively to the approval of Bitcoin Exchange Traded Funds (ETFs) in many places in the United States, but a parabolic crypto bull run has yet to form.
Strong upward price pressure should push Bitcoin (BTC) to new highs in the near future, will the memecoin market benefit? Experts disagree.
Historically, when Bitcoin grows, the rest of the market – including altcoins and memecoins – grows along with it. At this time, the market is bigger than ever with many projects, layer 1s, layer 2 and memecoins.
About 5,000 memecoins launched on Solana today. pic.twitter.com/t6huKn8XAo
— Web3Auth (@Web3Auth) December 22, 2023
On December 22, 2023, deregulated wallet provider Web3Auth announced, “5,000 memecoins launched on Solana today. This is one blockchain in one day. With such a massive market, any additional capital inflow benefits will be spread more thinly than before.
Talking to Cointelegraph, Jupiter Zheng, partner, liquid fund and research at investment firm HashKey Capital, said that a Bitcoin ETF may not be the great market mover that some crypto investors are hoping for. As Zeng explains, the real driver of memecoin's fortunes comes from the public:
“Memecoin is the community that drives the mania. Hence the place [Bitcoin] An ETF by itself is not enough to create a successful memecoins gold rush.
Despite this, Zeng believes that the industry should prepare for the wave of memecoin mania just in case. Creating memecoins is becoming easier than ever, and the combined pressure of fresh capital flows, increased network usage, and more coins will test the strength of blockchain networks.
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In a post-EFF world, Zeng said, “if funds begin to flow into alternative Tier-1 and Tier-2 projects, it will be critical to address infrastructure needs to retain users and ensure successful product delivery.”
In conclusion, even though a single Bitcoin ETF does not guarantee a memecoin bull run, the sector should be doing so. Failure to do so may kill the bull run in the bed.
Be careful, the bull run is coming
While some industry players are playing the Bitcoin ETF position, others believe memecoin bulls will have their day.
Chen Arad, head of external affairs at Web3 security firm Solidus Labs, told Cointelegraph that memecoin's gold rush is expected.
“EFAs are creating more interest and credibility in crypto, which will definitely translate into the memecoin space as well. We will likely see more and more volume across the board, including for memecoins.”
Arad cautioned that this is not all good news, stating that the frenzy that could grip the market will also create an environment for fraudsters to exploit their inappropriate business.
“EFAs are generating a lot of buzz and FOMO. [fear of missing out]”Unfortunately, they are easily exploited by fraudsters and fraudsters,” Arad said.
The security expert said he is looking at some of the scams associated with ETFs.
“Our team and our TokenSniffer solution are detecting a significant increase in fraudulent tokens that use the names of ETF issuers and ETF tickets to create fake coins and remote pool scams to attract investors in order to steal their funds. We always advise you to be cautious when investing in crypto and especially memecoins,” Arad added. , especially since buzz and FOMO are scammers' best friends when the buzz is high.
Taking an internal view
There may be reasons to be wary of what a bull run will bring, but there are also plenty of reasons to be optimistic.
The CEO of Avalanche memecoin Husky Avax, known as Paps, is among those who see the positives. Papps told Cointelegraph that the Bitcoin ETFs space will help change public attitudes toward cryptocurrency as the industry becomes mainstream.
I think ETFs are a great tool for mass adoption of cryptocurrencies and blockchain. It is an institutional confirmation. [blockchain] Technology has intrinsic value. Moreover, it is a change in the image that these properties can have with the public.
“Beyond Bitcoin, Ethereum is in the spotlight right now, and maybe even AVAX,” Papps said. “Because of this, the [decentralized finance] The environment can benefit. I am sure that if the light is installed through ETFs, it will play a big role in Diffie's democracy. We've seen memecoins become as mainstream as Doge or Shiba.
While Papps believes the position of Bitcoin ETFs will be good for memecoins, he highlights that this is not always the direction of travel.
“I know a lot of people who didn't buy Bitcoin or Ethereum but still bought these memecoins,” he said.
What did Bitcoin do after being approved by the ETF?
On January 10, the United States Securities and Exchange Commission (SEC) approved the first Bitcoin ETFs. According to data on CoinGecko, this caused Bitcoin to rise from $44,684.82 on January 10 to $48,494.62 on January 11, representing an 8% increase. Bitcoin has since recovered to $43,136.63
While it may not have been the parabolic rise in Bitcoin price performance that some had hoped for during the SEC's ETF approval, BTC is still performing well.
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Once the market kicks into gear, it creates a new dynamic for industry insiders and consumers. With that comes its own challenges, but many agree that bull market challenges are much better suited to bear than bear market challenges.
