In 2021, the joke-based cryptocurrencies performed far better than everybody’s expectation, and they are on the verge of outperforming major cryptocurrencies. These cryptocurrencies are also known as memecoins.
What are memecoins?
Memecoins are digital coins born from trending social media memes, puns, jokes and sarcasm. According to CoinMarketCap, over 130 coins are rotating in the market today.
Gaining the memecoin popularity with the highest market capitalization is Dogecoin (DOGE) and Shiba Inu (SHIB).
After the success of DOGE and SHIB, a large number of dog-themed memecoins set foot in the market and gained traction within the second half of 2021.
Dogecoin (DOGE) and Shiba Inu (SHIB)
Launched in 2013, Dogecoin is the first and foremost joke-themed coin to enter the memecoin circulation. However, DOGE didn’t gain any popularity just after it was incepted.
It remained unknown for around seven years but gained the real market sentiments and abruptly surged in 2020 to feature among the top 10 cryptocurrencies. It became a trendsetter that led to the creation of more dog-themed memecoins.
Shina Inu is based on a meme of a Japanese dog called a Shiba Inu. It soon became a sensation. Generally, when Elon Musk uploads a picture of his Shiba Inu puppy, it is Dogecoin that surges knowing no bounds.
SHIB became the top memecoin in the list at a certain point, surpassing DOGE. It soon became a sensation and currently has a market capitalization of billion dollars.
Reasons for the growing popularity of memecoins
While it’s too early to predict the popularity of memecoins, some experts say that during the pandemic when the fundamental market was likely to crash, the crypto market took a major turn, as retail investors wanted to protect their capital against inflation.
Memecoins also took their pace, growing in market capitalization and variety. Another reason retail investors are attracted to memecoins is that only a few cents are required to buy or sell these coins.
Technically, the low price doesn’t mean lower demand as these coins have a large supply of liquidity from their market makers.
Some memecoins have unlimited stock that has a long-term impact on their price. Traders can get thousands or even millions of DOGE or SHIB coins in one go.
Apart from the high profits, the memecoins are highly community-driven. As they are born from popular Internet memes and considered to be a joke by many, their performance and fame are mostly connected to social media support and hype created by their influencers.
In short, they usually have a strong community influencing the sentiments of individuals by doing something unique and fun that has not been done yet.
Overview of potential risks
Trading or investing in cryptocurrencies involves huge risks. With new memecoins circulating in the market, investors and traders hoping to maximize the profits from DOGE and SHIB, it is important to Do Your Own Research (DYOR) before choosing any trading or investment options.
Remember that memecoins are highly volatile compared to other cryptocurrencies. Memecoins are usually sentiments-driven and might crash unpredictably, so you should never choose what you cannot afford to lose.
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