What is Meme coin?
Meme coin can be defined as a type of cryptocurrency that is usually created based on social media and internet culture, has no fundamental financial value or intended use, and gains and loses value through community support and viral interactions
Meme coins stand out with 3 main characteristics,
- It is completely community-driven and has a very high volatility.
- It has no fundamental value.
- It is usually for entertainment and humor.
Why have Meme coins gained a prominent place in the cryptocurrency market despite having no fundamental value behind them?
Meme Coins are the most abundant coin type in the cryptocurrency market, thanks to their high volatility and rapidly increasing and decreasing numbers. In 2021, there were 124 different memecoins, while by 2024, more than 10 million memecoins had been created, with a total market capitalization of over $100 billion. This data shows that memecoins are proliferating rapidly and gaining an important place in the market.
Another purpose of memecoins is to act as a magnet, attracting investors who like high volatility and have a high appetite for risk to the cryptocurrency market. While crypto assets in general are seen as having high volatility compared to many other assets, meme coins can be considered relatively stable compared to assets in their category. The volatility of meme coins is characterized by the frequent occurrence of extreme scenarios, such as the exponential growth or complete disappearance of deposited funds within a few minutes.
By entering the market, memecoin traders are increasing the usage of the blockchain networks they trade on and contributing to the growth of the overall crypto community. Recently, in addition to new investors entering the market solely to trade memecoins, there has also been a growing number of investors who are already active in the crypto market and want to capitalize on the potential of memecoins. This has resulted in a significant portion of the capital in the market being directed towards meme coins, which has led to a significant increase in meme coins’ market share.
At the same time, US elections and other major events are tokenized into meme coins as hot topics and thrown into the market through platforms like Pump.fun, and major exchanges list them to profit from the high volume. In addition, social media figures such as Elon Musk have played an important role in the memecoin craze.
Pump.fun and Streamlining Meme coin Production: Rapid Rises and Falls
Another important factor is the ease of producing and launching Meme coins through Pump.fun for a low fee, even without knowing coding or software. This, combined with the efforts of the memecoin traders on the inside to create hype at the same time, has created a very fast marketplace, with hundreds of coins being created and destroyed every minute.
FCA Warning and Pump. Fun’s UK Service Suspension
The UK Financial Conduct Authority (FCA) has issued a warning to the memecoin production platform Pump.fun, stating that the platform is not authorized in the country. Following this, Pump.fun announced that it would no longer serve users based in the United Kingdom.
SEC Announcements on Meme coins and Investor Uncertainty
The US Securities and Exchange Commission (SEC) announced that meme coins are not subject to federal securities laws. It was stated that meme coins do not meet the definition of securities as they do not generate income and do not provide operating rights. This statement has caused uncertainty among investors and increased the expectation for more regulation on the future of meme coins.
The US Cryptocurrency Reserve and its Impact on Meme coins
While the US agenda to create a cryptocurrency reserve does not directly affect meme coins, it increases the overall regulatory pressure on the market. As the cryptocurrency market has matured and regulations have tightened, the speculative value of meme coins has lost its appeal. As investors have shifted to more secure and regulated digital assets, meme coins’ depreciation has accelerated. This process reinforces the decline of meme coins after their extreme rises in the past.
Are Meme coins Done?
The nature of meme coins, just like other meme coins, is that they are known to come up periodically and then disappear for long periods of time, or sometimes completely. While it’s true that their heyday is behind them and their popularity is starting to wane, it would be misleading to say that these coins have completely disappeared. Because even though meme coins have had their ups and downs, they are still followed by some investors and communities and periodically regain attention.
The Future of Meme coins in the Crypto Market
While it is difficult to predict future pricing for meme coins, their lack of functionality is a strong indication that they will continue to be short-lived. However, meme coins are proliferating rapidly and are constantly in the spotlight, so it is difficult to foresee a future where they will disappear completely. In short, meme coins will continue to have periodically different market shares in the crypto sector for a long time to come.
