Ditch the Meme Coins — They Won’t Spark the Next Bull Run

Author: Evan Luthra, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

The memecoin market has been booming this year. It is actually the only cryptocurrency sector that has thrived during the Bitcoin halving cycle. In some ways, it is reminiscent of the GameFi story in the previous cycle - a phenomenon that I happened to predict before it took off.

However, despite the enthusiasm for memecoins, there are good reasons to suggest that they are not the best investment vehicle to drive a bull market. It would be better for the long-term health of the market if new investors turned their attention to more sustainable real-world assets (RWA) and artificial intelligence (AI).

Memecoins are generally designed to be lighthearted and fun. You can think of them as the crypto cousins ​​of meme stocks like AMC and GameStop. Some notable examples of memecoins include Dogecoin and Shiba Inu - which I consider to be the OG memecoins.

It’s been a long journey since Dogecoin was first created, but the memecoin space has grown so much in a short time. In March 2024, there are only about 2,000 memecoin projects. Only about 1,000 of them are liquid, meaning they have a trading volume above zero. As of August, there are about 1.7 million tokens on the Solana-based memecoin platform PumpFun.

As of August 10, a total of 1.7 million tokens have been issued on PumpFun. Source: X

A study published by Binance in June found that the value of memecoins has risen by nearly 600% so far this year. This figure is more than 10 times that of Bitcoin in the same period. The growth of memecoins has been driven by high speculative activity and the celebrities behind some of the activities. These tokens are also a topic of widespread discussion on social media: mentions grew by more than 50% during the time period studied by Binance.

Celebrities have contributed by using their influence to promote memecoins under their own names. You can find some celebrity memecoins on CoinGecko, such as Iggy Azalea’s MOTHER, RNT, Andrew Tate’s Top G, Jason Derulo’s JASON, Flocka’s Waka Flocka, and Davido’s Timeless Davido. I have been an active investor for years and have invested in some of the top projects in the industry, but like most other heavy crypto users, I also invested in JASON and MOTHER — with investments as high as $100,000.

Are Memecoins Sustainable?

Memecoin has attracted the most liquidity in this cycle and has raised questions in the industry about whether memecoins are a sustainable (or ideal) investment vehicle for the future. The memecoin wave is driven primarily by short-term thinking. People are looking for quick investment schemes to cash out. While this is not necessarily a bad thing, it has fueled the fear of missing out (FOMO) in the memecoin space. This FOMO is one of the biggest reasons why the memecoin market has seen so much growth. A report in August found that 97% of memecoins no longer exist, and more than half of them are malicious. Source: Chainplay

In Q1 2024, the average price growth of memecoins (over 1,300%) was 4.6 times higher than the next most profitable narrative, RWA (growth just under 300%).I believe this gap will soon reverse. The blockchain industry cannot grow solely on the liquidity generated by the memecoin bubble. Few of these tokens are profitable. A report released in August showed that roughly 97% of all memecoins no longer exist—more than 2,000 memecoins disappear every month.

The blockchain industry can only grow with real liquidity catalysts in industries like RWA and AI. These are the sustainable areas that can drive the industry forward. The reason is simple: With RWA, real assets can be tokenized on the blockchain. Meanwhile, according to Gartner research, The AI ​​market will be worth $297 billion by 2027, growing at a CAGR of 19.% over the next few years.

The rapid growth of the memecoin industry is impressive, but it is not the industry that is providing the sustainable liquidity that the industry needs to move forward. Tokenizing trillions of dollars worth of real estate, art, and other expensive collectible assets will achieve what memecoin cannot - AI-driven projects will also bring authenticity, augmentation, and automation to businesses on the blockchain. These industries will drive the next bull run.