Financial nihilism fuels meme coin craze as traditional finance loses appeal: Binance

Memcoins are not just speculative assets. According to a recent report by Binance Research, they have gradually begun to represent a symbolic rebellion against established financial norms, adapting to the demographic and ideological changes shaping modern markets.

As of 2022, the share of meme coins in the total 3 (crypto market excluding BTC, ETH and stablecoins) almost tripled, from 4% to 11%, partly due to financial frustration. and the search for alternative investments in the face of rising inflation.

What is driving Meme Coins?

In the year From 2020 to 2022, the global money supply will increase by more than 25%, from $81 trillion to $102 trillion. This rapid growth of the global money supply has led many to seek refuge in assets they perceive as having long-term value to protect wealth. Real estate is a classic example as it has historically served as a store of value.

However, home ownership has become less attainable, with wages unable to keep pace with rising housing prices, a disparity that is particularly challenging for younger generations.

This economic reality has encouraged what Binance Research calls “financial nihilism”, as young investors, hit by credit crises and unprecedented inflation, are casting doubt on traditional financial systems. Their dissatisfaction has been demonstrated by events such as the 2021 Gamestop short squeeze and meme coins today's similarly disruptive decentralized alternative.

Meme Coins managed to create the same excitement that the crypto market created during the ICO boom of 2017. Their appeal lies in their exceptional accessibility; Unlike complex Layer 2 solutions or Diff products, meme coins provide a clear and relevant narrative that everyday investors can easily understand.

The simplicity of the meme-driven coin allows buyers to quickly connect with the concept of “cute or attractive”, which reduces “time-shifting” compared to many technical altcoins. This accelerated awareness, in turn, helps the narrative spread faster, build communities and drive speculative demand more quickly.

This was proven by the relatively new Dogwifhat (WIF), which reached a market cap of $1 billion in 104 days, while Shiba Innu (SHIB) achieved the same feat in 279 days, while the OG meme coin Dogecoin (DOGE) took 8. Years to reach milestone.

Additionally, over 75% of new meme coins have been created in the last year alone and are emerging at an amazing rate.

How Cabals and Influencers Raise Meme Coin Hype

Although interesting, meme coins are an extremely risky asset class with high risk of loss according to Binance Research. The majority of meme coins from the 2023-2024 boom were short-lived, with 97% seeing near-zero trading volume. Only a few like DOGE and SHIB lasted for 10 and 4 years respectively.

Despite the transparency of meme coins, retailers are vulnerable to manipulation by ‘cabals', who standardize pump and dump schemes, use hot addresses to simulate widespread circulation and recruit influencers to create artificial buzz.

With too many identical meme coins flooding the market, saturation is a risk; Projects should focus on unique value and innovation to prevent wasted time and capital.