The psychological and social process of “meme coin mania” formation is similar to other mania formations, but in this case it is driven by financial losses, emotional attachment, and social validation gained through cryptocurrency markets and online communities.
Here is a breakdown of the different psychological stages in the formation of a meme coin mania:
Disillusionment with Utility Tokens — Losses and Distrust
The individual’s journey begins with losing money on a utility token or venture-backed project, which is also the initial stage of the psychological shift:
Cognitive Dissonance — The person had believed in the utility or long-term value of the utility token, but after experiencing financial losses, the mindset is conflicted. They had trusted these assets to deliver on their promises, but reality does not match expectations.
Loss of Trust — The brain becomes disappointed with the promises of these utility tokens. Financial losses lead to a collapse of trust in the system (VC-backed or utility-focused projects), triggering a psychological need to find an alternative narrative to explain why they were wrong.
Search for redemption – After disappointment, the individual’s mindset begins to be open to new ideas, especially those that promise faster or more dramatic financial returns, and this openness sets the stage for their eventual shift to memecoins.
Success in memecoins – Reinforcement of belief through gains
Next, the individual earns some money from investing in memecoins, and with it comes an emotional shift in mindset:
Relief and validation – After losing money in utility tokens, profits from memecoins feel validated. The brain begins to associate memecoins with success, triggering confirmation bias: they begin to believe that memecoins not only deliver profits, but are also an alternative to true utility tokens.
Reinforcement of Bias – During this stage, the brain begins to weave a narrative that memecoins will soar. Bias turns to memecoins as a new path to financial success, despite the lack of solid fundamentals to support them. At this point, the brain does not need memecoins to have deep utility, profit and emotional relief are enough to provide validation.
Social Frustration – Difficulty in Convincing Others
The individual begins to promote their new belief in memecoins to others, but encounters resistance:
Difficulty in Articulating a Vision – While individuals believe in the potential of memecoins, they have difficulty effectively communicating their vision to others. This may be because there is a lack of a coherent theory behind memecoins, leaving only emotional belief rather than logic.
Social Friction – Frustration caused by resistance from others. The brain is looking for social validation, but without external confirmation from peers, the belief remains personal and internal. This prompts them to double down on their beliefs and actively promote memecoins on social media. Cognitive Solidification – In the face of increasing rejection, the individual’s beliefs become more entrenched. In this stage, the brain begins to look for external reasons why others cannot understand what they “see.” Meeting a Charismatic Memecoin Theorist – Emotional Connection The turning point occurs when the individual meets a charismatic leader who presents a compelling narrative around the future of memecoins: Emotional Appeal – The charismatic theorist provides the intellectual framework that the individual needs to support their beliefs. The theory explains the chaos and speculation of the memecoin world and provides a reasonable explanation for why memecoins are the future.
Personal Connection – After studying the charismatic leader, individuals discover similarities in their stories, which creates an emotional bond. The theorist’s backstory resonates because it reflects the individual’s own experiences – financial loss, disillusionment, and redemption through memecoins. This emotional connection solidifies their trust in the theorist’s perspective.
Cognitive Relief – The brain finally feels relief. The charismatic leader’s narrative resolves the inner conflict (between past losses and current gains) and provides a structured way to explain why memecoins are the future. The theorist’s framework becomes a new intellectual anchor for the individual’s belief system.
Social Media Evangelism – Dopamine Boost
As individuals begin to promote the charismatic theorist’s ideas on social media, their influence begins to grow, leading to powerful psychological reinforcement:
Dopamine Feedback Loop – Every time an individual receives a like, comment, or new follower on social media, the brain gets a wave of dopamine. This reward mechanism reinforces the behavior of spreading the theory, allowing the brain to feel self-affirmed through external validation.
Reinforcement of Meme Coin Performance – If the price of the meme coin increases at this time, the individual receives more validation, further solidifying their belief in the meme coin and the theorist’s ideas.The brain begins to associate financial success with spreading this ideology, creating a powerful financial and social reward feedback loop.
Transformation of Social Identity – As social media influence grows, individuals begin to identify themselves as evangelists or promoters of the meme coin. Their sense of identity is deeply intertwined with the success of memecoins and the views of charismatic ideologues.
Memecoin Cult Formation – Cult Leaders and Shared Belief Systems
Eventually, the individual’s beliefs become part of a larger movement, and others with similar biases and frustrations discover the same charismatic ideologues:
Discovery of Cult Leaders – Other memecoin enthusiasts who have also lost trust in traditional tokens and are optimistic about memecoins eventually discover the same charismatic leader. This forms a critical mass of followers around the leader’s narrative, and the individual realizes that they have become part of something larger than themselves.
Shared Belief Systems – Memecoin cults form around the ideologue’s ideas, the profitability of memecoins, and the emotional and financial success they promise.
The leader becomes the center of this belief system, providing intellectual and emotional buy-in that solidifies the group’s collective biases.
Echo Chambers and Group Reinforcement – As more and more people join the movement, the group forms an echo chamber where members continually reinforce each other’s beliefs in memecoin. The theorist’s views become almost sacred and cannot be questioned. At this point, the individual’s brain operates in a closed system where dissenting opinions are ignored and the collective belief in memecoin grows stronger.
Cult Behavior – Complete Cognitive Commitment
At this stage, the individual is fully committed to the memecoin fervor:
In-group/Out-groupthink – The individual now views memecoin believers as the “in-group” and those who question memecoin as the “out-group.” The brain begins to protect the fervent belief system, ignoring skeptics and firmly maintaining the memecoin narrative.
Cognitive Solidification and Social Identity – An individual’s identity is now inextricably tied to the memecoin movement. Their self-worth is derived from social media influence and the performance of their memecoins, with the leader’s views being seen as the absolute truth.
Continuous Dopamine Rewards – Individuals continue to receive regular dopamine hits from social media interactions and memecoin price fluctuations, making it increasingly difficult to break away from this belief system.
In this process, the individual’s mindset moves from financial disillusionment to emotional connection with the charismatic leader, then validation through intellectual biases, to full identification and commitment to the cult memecoin.
This cycle is fueled by emotional, social, and financial reinforcement, creating a powerful feedback loop that is difficult to break. The memecoin craze operates as a shared belief system that provides financial hope and social belonging, with the charismatic ideologue at the center of it all.
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