Meme coins have made a habit of stirring the crypto waters for a while and then fading into the background until the next bull run comes around and they start rising again. These tokens have experienced at least three major boom and bust cycles since their inception in 2013, but who’s counting? By now, the majority of traders and investors are used to their shenanigans and know that it’s perfectly normal for such an unpredictable crypto subclass to go through these phases and behave erratically.
As a result, most no longer panic when meme coins go off the radar, but they don’t spiral into excitement when prices go up either. Instead, they keep a close eye on their evolution and wait for the right moment to make a move. Right now, market data suggests that a new meme coin season is in bloom.
If you pay attention to what the price charts say or read the
Shib news today, it becomes clear that meme coins are getting hot again, stealing the spotlight from other crypto assets. Dogecoin has increased by more than 46% over the past month, trading at $0.240409 at the time of writing, while Shiba Inu and Pepe surged by 21% and 72% respectively over the same period.
However, it’s not enough to spot a trend. It’s also important to understand the factors behind its formation so you can gain clarity on its potential impact, anticipate further movements and make informed decisions. So, let’s see what’s fueling the most recent meme coin revival and what this means for the market.
Political Endorsement
One of the most notable developments in the meme coin space this year was the launch of TRUMP and MELANIA tokens by Donald and Melania Trump shortly before Trump’s inauguration in January. This ties into the political finance (PolitiFi) movement, where political figures or events inspire the creation of new meme coins.
The intersection between politics and crypto seems to work in favor of meme tokens by bringing them back to investors’ attention and lending them more legitimacy. Meme coins were created as a joke, and that gave them a bad reputation, as many blasted them for their shallowness and futility. Although they’ve been in the market for quite some time, they are still struggling to detach themselves from this image and prove themselves as worthy contenders in the crypto market.
Therefore, endorsements coming from the political sphere can help meme tokens gain more credibility and build more trust with investors. Even though most PolitiFi meme coins have no official affiliation to the figures whose image they use, the simple association is enough to create positive hype around them and this buzz has now spread to the entire meme coin market.
The Chase For Substantial Rewards
The potential for high returns was the reason investors took an interest in digital currencies in the first place, and that’s precisely what put meme coins on the crypto map: their well-known ability to turn small investments into huge returns and make millionaires out of early adopters almost overnight. That used to be the case with other crypto assets as well, back when they were relatively unknown and had small market caps, but things have changed a lot in the meantime.
Established coins like Bitcoin and Ethereum have grown so much over the years that they can no longer yield the massive gains they did in their early days. The law of diminishing returns provides a logical explanation for the phenomenon: when resources are continuously added to a process while all other aspects remain the same, the output for each investment will start to decline at one point. That’s exactly what’s happening with major crypto assets. People keep pouring money into them, but they don’t earn massive profits anymore.
The likes of Bitcoin and Ethereum have plateaued in terms of return potential, and from this point on, there won’t be any outsized returns. As a result, investors are looking for other opportunities to make massive gains quick and meme coins, with their small market caps and volatile nature, seem to fit the bill perfectly.
Bitcoin’s Surge and Market Recovery
Meme coins’ current rally can also be attributed to the positive developments taking place in the market at the moment. Bitcoin surpassed its January record to reach a new all-time high of $111,259, most likely fueled by substantial inflows into spot
Bitcoin exchange-traded funds (ETFs) and improved investor sentiment.
Although meme tokens are a distinct crypto category, they are directly impacted by movements in the broader crypto market, just like all other subclasses. Right now, with Bitcoin appreciating and more money coming into the crypto-related products, investors’ risk appetite seems to have returned. This means that meme coins are becoming more appealing as traders are looking for high-risk, high-reward opportunities.
Tech Advancements
The biggest issue people had with meme coins was their lack of real-world utility. Yes, meme tokens are fun and exciting, and their values can increase dramatically, but they don’t do anything else; they don’t solve any issues, and their applicability is extremely limited.
However, recently, meme coins have started evolving beyond their comical roots. Advancements in blockchain technology have facilitated the development of meme coins with enhanced functionality. Projects like Shiba Inu’s Shibarium layer-2 network are expanding into areas like decentralized finance (DeFi) and non-fungible tokens (NFTs), adding utility and attracting a broader user base.
By leveraging tech innovations and integrating features that can help them address certain needs, meme coins are entering a new stage in their development and positioning themselves as strong market players.
Once seen as a crypto joke, meme coins are experiencing significant maturation. The combination of political connection, investors’ search for profitable investments and tech advances has created the perfect context for meme coins to thrive and rise to the top once more.
