As the crypto world buzzes with excitement over the soaring value of frog-themed coins and FOMO takes over Crypto Twitter, it’s essential to step back and evaluate the risks associated with this latest trend.
Meme coins like Pepe, Wojack, and WSB have caught the attention of “degens,” risk-loving traders who bet big on obscure tokens. This high-stakes approach is not exclusive to crypto, as seen in Reddit’s Wall Street Bets community, but decentralized finance (DeFi) has undoubtedly fueled the meme coin frenzy.
Though meme coins aren’t new – Dogecoin, for example, was launched in 2013 as a joke – they’ve gained significant traction, inspiring a wave of dog-themed tokens like Shiba Inu and Bonk. According to CoinGecko, Dogecoin’s market cap currently hovers around $11 billion.
But what makes meme coins so risky? Lim Yu Qian of CoinGecko explains that these coins rely on internet cultural references and their ability to generate hype. Pepe, for instance, has seen a staggering 2,900% growth in just 17 days. Even rapper Soulja Boy has jumped on the bandwagon, tweeting about his Pepe investments.
Despite the buzz, industry veterans like Thomas Kralow, founder of University Grade Trading Education, advise caution. Kralow likens meme coin investments to gambling, noting that they often lack the substance to maintain value once the hype fades.
Chen Arad, COO and co-founder of Solidus Labs, agrees, adding that hype and FOMO can create environments ripe for scams and price manipulation. While the potential for high gains may be tempting, Arad urges investors to exercise caution when considering meme coin investments.