Retail Investors: What is the Best Thing?

Memecoins and investment are words you don’t often hear in a sentence together unsarcastically. 

However, a year into the bear market, memecoins such as Shiba Inu and Dogecoin haven’t just survived but performed as well as, or better, than many “serious” crypto projects. 

Additionally, memecoins boast some of the fastest-growing, most active crypto communities despite challenging market conditions.

Market Cap of Doge&SHIB

Although it is important to recognize the landmines (such as the huge whale influence on memecoins), are memecoins positive for retail investors in 2023. 

Footprint Analytics joined Alexander von PointsVille, XanderHumbleHedgeDAO founder, and PeterTo discuss, contact ICHI’s Community Lead,. In a Twitter Space. 

1. Trades will love Memecoins

The volatility that crypto traders require is what makes trading such a profitable market. Memecoins are tokens without utility that are volatile. However, this definition needs to be updated as several memecoins are now building utility.

“Any time Elon Musk posts a picture of a dog, that’s guaranteed 10% gains on a bunch of memecoins,” said Alex, who added that it doesn’t matter whether you think that’s a good thing or a bad thing.  

“The free market doesn’t care about our opinions. And [the memecoin market] It is the largest and most free market. A memecoin has almost no utility—with something so volatile, it’s the essence of the free market.”

In many ways, memecoins are similar to luxury goods, like sneakers, where prices don’t correlate with utility but with hype. 

“The value is very in line with market sentiment,” said Xander. 

“How does something with no utility gain value? With sentiment. You have people who can ride sentiment. It’s marketing, purely. It doesn’t make rational sense, but the market doesn’t need to make rational sense.”

2. Memecoins go beyond memes.

Footprint covered the area previously Shiba Inu ecosystem. Although the token was originally created in 2020 as a joke by the community, it has evolved into an ecosystem that includes a DEX and NFT marketplaces, as well as a DAO.

Price & Trding Volume of SHIB-Meme

Many memecoins make charitable giving a central part of their utility.   

“Even though we classify them as memecoins, if you see the progress of Shiba, they are pretty much going from memecoin to concept to doing things with Shibarium,” said Peter. “I think if you have a team that’s very loyal to the company, and they start building it, you can actually get out of that realm of memecoin to having an actual use case. That will be a game changer—moving from being a memecoin to a real company.”

Memecoins continue to excel at grabbing people’s attention, which is great during the bull market and periods of high volatility. Both traders are interested in the upside as well as shorting tokens. To retain value over time, however, it is important to seek utility. 

“Shiba Inu tried to do quite a few things with an NFT marketplace. These Memecoins can be used to fund humanitarian projects, which could attract attention. If some organization, foundation, or independent team is investing further into some community or infrastructure, that infrastructure could be capable of providing other services,” said Alex.

“What would make the most sense for me, personally, would be video games. These are my favorite thing to trade and memes. The concept is to keep that community there, beyond trading, when it’s a bear market, or the volatility is low and it’s a boring market. P2E would make sense for something like Dogecoin, which has no cap, and can keep creating tokens.”

3. Memecoin trading requires that you accept that whales make waves

70% of the total supply is held in the 100 most DOGE-holding wallets. 

This is simply the reality of space. Luckily, whales are rational actors in a free market—which means randomly dumping all of their assets unexpectedly is unlikely. The community’s growth will also bring new liquidity. 

However, traders must be able to understand the dynamics. 

“I think most traders know that whales can make waves, and they’re trying to ride them, following along with the whales and making profits. It’s understood by experienced traders that that’s how you roll,” said Alex.

“You’re riding the distance between levels of liquidity on the market, added Xander. 

“When it comes to speculative trading, that is your only protection, besides perhaps the information you know. Protecting the interests of whales is essential [and aren’t just going to dump.] The protection is free market dynamics, so if you want to protect yourself, learn how free markets work.”

4. Memecoins are used to help new users get into crypto

Blockchain is a complex space filled with technical developments and jargon that can intimidate newcomers. However, memecoins still function along the core premise of crypto—the decentralization and self-custody of value. 

“They’re easy to understand, for the most part,” said Xander. “You can still use them as an exchange of value—you can send them anywhere in the world without an intermediary.”

“I think it’s really cool that we have, in the crypto space, these simpler coins that are easy to interact with. As an onramp, these memecoins are effective because there’s not much to understand about them—though SHIB is breaking this mould. You don’t have to read a whitepaper on DOGE.”

Peter also added that memecoins “provide a transition for people who don’t know much about crypto to enter into the space. 

“Everyone’s heard of Bitcoin; that’s almost like the old-school stuff. But they see these memecoins, and they have these funny pictures, and it’s eye-catching. And that’s good marketing for crypto to the general population.”

“It’s a really easy way to jump in and be part of Web3. If you’re a speculative investor, you’re part of Web3. You’re helping the ecosystem thrive by participating in it. And so, I think it’s a good way to get your feet wet.”

Footprint Analytics contributed this piece.

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