The continued growth of the Memecoin sector hinges on its long-term service.

Despite the recent frenzy surrounding Bitcoin (BTC) – which saw the digital asset hit a record high of $73,600 in March – the memecoin sector is the most profitable crypto sector so far in 2024, posting average returns of more than 1,300%. Major symbols by market capitalization.

Several memecoins seem to have taken the market by storm overnight, with newly launched offerings such as Book of Memes (BOME), Brett and Cat in the World of Dogs (MEW), rising to become the top 10 meme projects in A matter of weeks. Amidst this madness, many entrepreneurs have managed to turn small investments into life-changing ones.

For example, an investor invested $13,000 in Donotfomoew (MOEW) tokens shortly after the listing of the decentralized exchange (DEX) on April 3, turning $13,000 into more than $2 million in one hour. According to reports, the trader initially bought 499.9 million MOEW. After the first four Ether (ETH) minutes. In less than an hour, the trader sold 111.65 million MOEW tokens for 99 ETH, which was $328,000 at the time.

In another similar incident, a trader accumulated billions of Apu Apustaja (APU) tokens and spent $8,300, only to sell them later when the price rose to $0.0007907, bringing the total value of the investment to $6.5 million.

Commenting on the eye-popping volume in memecoin markets, CoinGecko analyst Lim Yu Kian said:

“The memecoin narrative was 4.6 times more profitable compared to the next best performer, the real-world asset token narrative. [RWA] And it's 33.3 times more profitable than the lowest-earning tier-2 narratives in Q1 this year.

The number of Google searches for the term “memecoin” reached its second highest level on record in March, and the sector's total market capitalization exceeded $50 billion at the same time.

Does the rise of memecoins reflect investor sentiment?

Some market observers believe that the popularity of memecoins indicates the widespread demand for decentralized technology and the cryptocurrency industry.

Shitoshi Kusama, the unnamed lead developer of the world's second-largest memecoin (SHIB), told Cointelegraph that rising valuations show investors are ready for a big shift in how decentralized technologies are front and center in the digital mainstream. The real power of memes, he says, will be their “real-world impact.”

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Expanding on use cases, Kusama says Shiba Inu's fully homogenous crypto platform from zama.ai and its soon-to-be-open payment technology offerings ensure that Mame projects can provide the same longevity and service while remaining fully decentralized. he said.

“While crypto in general is highly volatile and speculative, with many projects going to zero, Shib continues to create identity, security and technology systems to mitigate risks. That way, as the bull market continues, we can safely tap into the next billion users.”

Indrajeet Roy, co-founder of crypto predictions market TradeX, told Cointelegraph that the rise of memecoins is a strong indication of the role that narratives and marketing have played in the success of this growing asset class.

“Meme coins are particularly sensitive to sentiment and trends. It shows how communities of continuous humor and content create buzz and lead to swing. Memecoins is becoming the gateway to the crypto world for the masses,” he said.

Is the ongoing madness sustainable?

Some memecoins may offer a modicum of utility, but many seem to lose their sky-high valuations as quickly as they have, leading many to question the ecosystem's sustainability.

Roy believes that since most memecoins lack strong fundamentals or exploit issues, their popularity will continue as long as the current intersection of internet/social media and crypto finance continues. He added:

“The growth of the meme industry is a testament to how narrative driven the market is now. Healthy growth occurs when the majority of users move to more research-intensive, fundamentally robust projects. But at the market level, it's still early in this bull cycle, so it might not be fair to call this growth unsustainable, although that may be the case in months.

Roy thinks that as the sector grows, projects will become more focused on services, and may merge with other domains such as GameFi.

“Memecoins can add utility to many series of prediction markets, for example, the Trump token will bring many utilities around memecoins to market, trade on the election as a reward,” he said.

Solana-based memecoin ambassador Michael Telera (LAIKA) told Cointelegraph that any doubts about the sustainability of the memecoin sector can be easily dispelled by the amount of capital investors have poured in over the past two years.

In his opinion, as more and more people begin to understand the unique technological and social concept – such as their ease of use, use in the financial system and the potential to educate users about blockchain technology – expressed in these signs, adding “Memecoins, especially the current boom in a simple, understandable and accessible way.” We believe it will somehow help bring new blood into the industry.

Memecoins may face legal challenges.

Telera believes that as the adoption of memecoins grows, “we will see new complexities, regulations, restrictions.” The increase in regulatory oversight “makes it difficult to create new projects,” he said. Next winter may cause some temporary pinching. But then, winter comes again. “

The memecoin debacle also raised concerns about the maturity and integrity of the crypto market. In a recent interview, a spokesperson for the crypto exchange, Bitru, told Cointelegraph that the uncontrolled increase could “distort the image of cryptocurrencies, which could undermine their credibility and the widespread adoption of blockchain technology.”

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Additionally, the proliferation of racist and homophobic tokens in recent months has led some in the crypto community to call for some form of constructive intervention, stressing the need for strict regulations and oversight to ensure the industry maintains its integrity and fosters responsible innovation.

Therefore, as the memecoin phenomenon continues to evolve, it will be critical for both regulators and industry actors to carefully navigate these challenges, protect the interests of investors, and protect the reputation of the crypto ecosystem as a whole.