Inspired by current events and online memes, and backed by influencers, online communities and celebrities, meme coins have shot to fame. But why have they become so popular?
Elon Musk & Dogecoin
Since Elon Musk promoted the original meme coin, Dogecoin, there has been a trend of imitators, promoted by social media influencers on platforms like TikTok. But what is a meme coin?
Usually, meme coins have no inherent value and typically no utility. As suggested by the name, they’re often also inspired by internet memes. Dogecoin, the first meme coin is based on a picture of a Shiba Inu dog.
Since the launch of Dogecoin in 2013, it has become relatively easy to create a crypto token, and meme coins can be launched quickly. They often rapidly become popular thanks to their promotion by influencers.
In May of this year, Facebook CEO, Mark Zuckerberg posted a photo of his pet goals with the caption “My Goats: Max and Bitcoin.” Within a few hours, a meme coin named Aqua Goat emerged. Its value increased by almost 300%!
The psychology behind meme coins
When we look at these insane versions of crypto, we see huge price increases, then massive drawdowns. But, how do we evaluate what’s going on? What’s pulling people in?
Is it purely driven by financial speculation and the desire for profit, or is there more to it? Some suggest it’s also an expression of identity- that people are willing to risk a lot to identify with these influencers and the particular set of ideals that they promote. It may be explained by an unconscious feeling or the desire to feel part of a team.
Most see investing in meme coins as insane. But others look at it as a cheap bet with the potential to achieve huge profits.
The rise of meme coins
Insane or not, meme coins have risen to impressive heights this year. In October this year, Shiba Inu (SHIB) overtook Dogecoin, its original inspiration, by market cap and turned one investor’s $8,000 SHIB into over $5 billion!
