Where do meme coins get their value? 

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When it comes to crypto investments, people tend to apply a rather black-and-white thinking, labelling all digital currencies as either good or bad. However, what most fail to realize is that crypto is not a monolith, and there are many different types of cryptocurrencies in the market, each of them with specific structures, purposes, features, and use cases. This means one can’t put all digital currencies in the same bucket and judge them as a whole since they carry different levels of risk and, consequently, provide different earning prospects. 

One crypto category, in particular, has made huge waves in the market with its out-of-the-blue ascent and unique approach, capturing the attention of the entire community and those beyond it and raising questions regarding their value and validity. These are the meme coins. Emerging on the crypto scene in 2013, when cryptocurrencies were still very new, meme coins were initially designed as simple jokes that made fun of the mounting crypto craze, being based on internet memes. But the joke caught on, and soon enough, meme coins turned into a viral trend in their own right.  

As a result, these tokens have attracted very different reactions, being both blasted for their superficiality and lack of intrinsic value and acclaimed for their rapid rise and their lighthearted and humorous take on the whole crypto phenomenon. Dogecoin, the project that initiated the meme coin phenomenon and, to this day, the most prominent crypto in this class, was put under the microscope, with the Doge price prediction being one of the most checked metrics by traders and investors. 

With meme coins still going strong in the crypto market despite slumping and being on the brink of collapse several times, it’s only natural to wonder what has kept them afloat all these years.

Not your typical cryptos 

Meme coins may look like all other crypto assets from the outside, being underpinned by blockchain technology and offering all the benefits that come with it. For the uninitiated, the differences between this crypto category and others may easily go unnoticed. But for versed market players or those who take the time to look under their catchy façade, the discrepancies are blatantly obvious because, unlike most crypto projects, meme coins don’t really have a purpose or a vision to back them up. 

While the majority of cryptocurrencies clearly specify their utility and boast real world use cases, meme coins don’t have practical applications, other than being used as speculative investments. Some meme coins don’t even have a white paper to state their mission and goals, which makes their success all the more surprising. 

For this reason, many traders and investors don’t give meme coins much thought, choosing to walk on the beaten path of conventional digital currencies like Bitcoin and Ethereum, which are more established and, therefore, safer. 

Nevertheless, understanding what makes meme coins so special and where their worth comes from is necessary in case one wants to use these tokens to create a more diversified crypto holding.  

Social media hype 

Since meme coins base their existence on viral memes and trends circulating on social media, their popularity and fame are directly influenced by the support they get from the communities on these platforms. As long as people show an interest in a certain trend linked to a meme coin, the asset in question will also benefit from all this attention, and its value is bound to rise. When the excitement starts to wear off, and online communities move on to the next big thing, these tokens inevitably plummet since there is nothing else to hold them up. This makes meme coins infinitely more volatile than traditional cryptocurrencies, which can act as a repellent for some and a magnet for others. 

Speculation 

When the volatility is high, speculation arises, drawing in traders and investors chasing quick gains, and meme coins offer a prime example in this respect. While cautious market participants prefer to steer clear of extreme price fluctuations, others run towards it, knowing that despite the risks, there’s also a good chance of high earnings. With meme coins, one never knows how long the hype is going to last and how their value is going to change, so investment decisions are based on pure speculation. 

Celebrity endorsements 

Another factor that often fuels meme coins’ ascent is the support they receive from different public figures. In Dogecoin’s case, for instance, the coin’s price spiked every time Elon Musk tweeted about it. Celebrities have massive followings that listen to and trust every word they say, so they have the ability to draw attention to a specific asset, and when that happens, its value automatically increases. The FOMO is strong in crypto investing, and with traders and investors constantly on the lookout for the next big crypto, a vote of approval from a high-profile figure is sometimes all it takes to convince them that an asset is worth investing in. 

Online culture 

Ultimately, meme coins are inherently tied to online culture. Developers get their inspiration from social media memes and popular trends that most internet users are familiar with. This establishes an emotional connection between the tokens and the online communities that participate in these trends. When someone invests in a meme coin, they become part of a community, and that makes them feel like they’re involved in something interesting and exciting. Therefore, there’s also a social aspect that contributes to meme coins’ significance and value. 

For better or for worse, meme coins make a very interesting crypto niche that can be quite profitable despite its inherent unpredictability. Given their fluctuating values, it’s advisable that traders and investors keep the risks in mind and practice caution when dealing with meme coins. In the end, it’s up to each individual to decide if the risks trump the benefits or the other way around.