What's Overlooked In The Meme Coin Mania

Hey LinkedIn, 

It's hard not to address the elephant or, shall I say, frog in the room.??

Meme coins are seeing a resurgence as mania grips the market.

I dive into what's happening, how we can interpret the craze and one thing that's been overlooked. ?? 

Meme coin mania

Meme coins exploded in the last few weeks, with the total market approaching $18B.  

We've seen the rise of meme coins "created by AI", such as $TURBO or $AIDOGE, and the return of a classic meme turned cryptocurrency, $PEPE, surging to an $800M market cap.

Bitcoin meme coins are also surging, thanks to newly created Bitcoin BRC 20 tokens. There are now 14K different Bitcoin tokens with a total market cap in excess of $100M.

We can interpret the latest meme coin craze in four different ways:

1. People are bored in the market. Meme coins are purely "for fun"—they sell fun, excitement and speculation. Does the bear market drive the recent speculation?
2. It’s driving demand on-chain. There’s no doubt about its impact on Ethereum (record ETH burning) and Bitcoin (new miner revenue).
3. They are not going away anytime soon. Many are treating meme coins as a lottery—it’s difficult to see this stopping.
4. It could hint at increased euphoria. It feels like a common trend in the market after a high run-up in price is (i) euphoria, (ii) rapid speculation of meme coins, and (iii) increased FOMO.

 Be careful out there 

Significant money has been made buying these "meme coins" early. But it’s more akin to a lottery ticket than anything fundamental.

Anyone dabbling in these risky lotteries should consider:

• Most people lose badly chasing new meme coins.
• A majority fail to remain relevant.
• Anyone can create one—many often "rug". 
• Concentrated ownership is common.
• A majority are anonymous.
• Ensure security best practices and stick to "play" money.

No one is talking about the high relative market cap versus other sectors

The market size for meme coins is ~$18B or ~1.5% of the total crypto market. 

It’s relatively low but seems high when we compare it to other "sectors" of the crypto economy in terms of dominance (% of total market cap).

• DeFi (minus stETH): ~3%
• NFTs & Collectibles: ~1.5% 
• Gaming: ~0.9%
• Scaling: ~1.5% 
• Metaverse: ~1%

DeFi, one of the most common use cases, is only double that of meme coins.

Likewise, if gaming unlocks the next 100M users, having a market cap below meme coins might not last long…

Is this being overlooked by the market?

Remember to take a deep breath if you're finding yourself chasing FOMO. 

Although they can offer legitimate opportunities under the right circumstances, it’s critical to remember the many that fail, as we only remember the hits.

Stripe doubles down on crypto with fiat-crypto onramp

What happened? The financial giant expanded its fiat-to-crypto onramp. The service allows web3 companies to help customers purchase cryptocurrencies more easily to greatly improve the user experience.

Why does it matter to you? It’s a positive sign one of the largest payment giants is doubling down on crypto despite the horror 2022. It marks yet another big player entering crypto—building on the likes of PayPal and Visa who've reaffirmed their commitment to building crypto products.

Market makers retreat from U.S crypto trading?

What happened? According to Bloomberg, two of the largest market makers, Jane Street and Jump Trading, are reducing their U.S. crypto exposure due to the ongoing regulatory crackdown.

Why does it matter to you? Decreasing market depth could impact volatility, as it's a critical piece of infrastructure for stable crypto prices. If true, it's a further example of the U.S.'s toxic attitude to crypto and could be a catalyst for increased DeFi adoption.

Bitcoin transactions hit new highs as demand soars

What happened? Bitcoin transactions ripped to a new record of ~ 680K. The demand was so high over 400K transactions were waiting to be processed, causing fees to hit $50+. The surge is due to increased Bitcoin functionality—users can now create (or inscribe) "NFTs" and cryptocurrencies inside individual satoshis.

Why does it matter to you? The jury is still out on whether the added demand is a net positive for Bitcoin. Some Bitcoiners raise concerns it detracts from its primary use case as un-censorable money and are more akin to spam. 

Bitcoin wasn't the only chain to see congestion, with meme coins on Ethereum causing 1 year high gas fees.

Thanks for reading the Weekly Shift. I hope you've enjoyed it, and I look forward to seeing you next week!

I'd love to hear any feedback; please send me an email!

Regards,

Ben Simpson

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