Memecoins can fuel viral growth — as they did for the crypto market throughout 2024 — but they also often lead to pump-and-dumps.
For most of 2024, the crypto markets' liquidity has been kept up through trading memecoins. According to a CoinGecko report, memecoins were the most popular narratives in the second quarter of 2024, capturing 14.3% of the market share. The numbers were very similar in the first quarter. These cryptocurrencies rely on fun communities and a brand of humor known as memes to attract users and traders. Through these memes, people from all walks of life can come together for a shared goal of banter and jokes with the promise of financial reward by trading the memecoins.
The market capitalization of memecoins — more than $50 billion as of Oct. 8 — shows how enormous and fast meme-inspired communities can grow. The lack of centralization in the niche makes the communities unique proponents of blockchain technology. These communities, riding on the backs of their representative tokens, go viral in minutes with loud hype as the fuel that powers them. Most of these tokens get inside-traded, which results in massive pump-and-dump. And as the hype reduces, the communities begin to quieten down.
In the last couple of years, the influence of meme-inspired communities has grown in leaps and bounds. And they highlight the clear power of a vibrant community behind projects. If a crypto project with real-world utility has a strong community like the ones in the memecoin ecosystem, its chances of going viral are relatively high.
