BitMEX co-founder Arthur Hayes has cautioned traders in the crypto market against labeling memecoins as ‘stupid’. Memecoins have been a subject of ridicule since they gained widespread attention in the market. According to some market participants, the assets do not provide a net positive for the blockchains that house them.
Arthur Hayes backs memecoins’ growth
In a recent interview with Real Vision CEO Raoul Pal, Hayes argued out the advantages and benefits of memecoins to the crypto sector. Arthur Hayes pointed out that memecoins help the crypto market through its attention-grabbing price runs while attracting users and developers into the industry.
He noted that users can say what they want about the coins but if they bring attention and engineers to the industry, then it is a positive for their blockchains. Arthur Hayes mentioned that only chains with value will be able to provide the needed support culture for these tokens. Moreso, he mentioned that Ethereum and Solana look like networks that are positioned to capture the flow of attention that the tokens bring.
Solana experienced a significant uptick in its network activity after a memecoin frenzy that lasted the whole of November. Although, other kinds of tokens launched on the network, adding to the increased network activity from memecoins. At the same time, Bitcoin also registered a wild increase in its network activity stemming from a massive inflow of BRC-20 tokens and ordinals on the network.
Industry perspectives in the growth of memecoins
Raoul Pal believes that the appetite for memecoins will grow stronger among younger crypto users due to the gaming mentality that most Gen Z and millennials possess. He quipped that these users will see it as ‘gaming with money’. Both Raoul Pal and Arthur Hayes agreed that memecoins can sustain this present attention for some more time, with Solana’s high-flying memecoin Dogwifhat tipped to become a huge asset in the coming months.
The dog-themed memecoin recently flipped Ethereum layer-2 Arbitrum (ARB) and now boasts a market cap of $4.5 billion compared to ARB’s $4.4 billion. However, there are executives in the industry who believe that the risks that these tokens pose are greater than their benefits.
A recent investor note by United States firm Franklin Templeton noted although memecoins provide quick profits, they are prone to risks associated with their lack of fundamental value or utility. In a recent blog post, Ethereum co-founder Vitalik Buterin revealed his disinterest in memecoins. However, he advised developers to ensure that their tokens possess utility instead of merely ‘virtue signaling’.
According to data from CoinGecko, memecoins were the best-performing assets in the crypto sector last month despite the risks attached to them. Last week, memecoins on CoinGecko gained over 20%, a much impressive rise compared to layer-1 tokens (6%), and decentralized finance tokens (5.4%).
