In 2024, meme coins emerged as the most dominant sector in the crypto market. According to a CoinGecko report, it was one of the most profitable sectors in the first quarter of 2024.
Meme coins have drawn both retail and institutional investors. The sector’s popularity has grown with the participation of celebrities like Andrew Tate and Iggy Azalea.
Why Meme Coins Are Popular?
Crypto analyst Altcoin Sherpa provided insights on X (formerly Twitter) about why meme coins are enduring. Reflecting on historical trading patterns, he noted the typical cyclical surges seen with meme coins, such as Dogecoin (DOGE).
These coins usually experience explosive growth followed by significant retractions. However, the pattern changed in 2024.
Sherpa remarked that Meme coins have transitioned from being a fleeting trend to a leading sector this year. Traditionally, technology-driven projects led the market. However, meme coins like Dogwifhat (WIF), BONK, and PEPE are now in the spotlight, surpassing more technical altcoins in attention and investment.
“Memes in isolation are always going to be present. You’re always going to have one crazy meme doing big numbers at all times in the industry; that’s probable. But I’m more talking about the entire meme coin sector greatly outperforming everything else as a regular occurrence for long durations, similar to what we have seen in 2024,” Sherpa stated.
He believes that meme coins’ appeal lies in their simplicity and accessibility, which makes them easy to understand and trade and contributes to their popularity.
“Memes have a much lower barrier to entry for retail participants, very similar to 2021 NFTs in that regard. Why ask someone to understand modular blockchains or chain abstraction when you can simply buy a picture of a dog with a hat?” Sherpa questioned.
Read more: 7 Hot Meme Coins and Altcoins that are Trending in 2024
Moreover, liquidity for meme tokens has surged, with the market depth hitting an all-time high of $128 million in early June, according to Kaiko. This increase is due to both price appreciation and a rise in transaction volumes.
Despite their popularity, Sherpa also highlighted the risks associated with meme coins, including high scam potential and insider manipulation. These factors could impact market dynamics unfavorably. Nonetheless, he advocates for including meme coins in diversified investment portfolios.
He suggests that investors diversify their portfolios by including meme coins alongside established cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
On the other hand, Ki Young Ju, CEO of CryptoQuant, offers a contrasting view. He observed a decline in meme coin dominance and hinted at a broader shift in the crypto community’s focus.
Read more: 10 Best Altcoin Exchanges In 2024
“Memecoin dominance in alt markets is declining. Crypto Twitter would be shifting from gambling to focusing on fundamentals, similar to a few years ago. Pack it up lads, it’s over,” Ju said.
The debate on meme coins’ future continues to divide opinion. While some analysts see them as a lasting element of the crypto sector, others predict a pivot back to traditional investment strategies.
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