Meme coins have been a popular category in the crypto space as it is sought after by most “newbie” traders trying to get rich overnight.
The daily transaction volume of this sector has exceeded most “normal” cryptocurrencies with good fundamentals which has confused many non crypto enthusiasts as to why it has become so popular.
In this article, we will be talking about why meme coin projects are so popular in the crypto market and how it became attractive to many traders.
The Rise Meme Coins
Meme coins started becoming popular in 2021, when the bull market happened, but the origin of the hype dates way further back before that.
The trend started in 2013 where the original meme coin was created which is the Dogecoin. Dogecoin with its coin DOGE was originally created as a joke by two founders.
They created the coin as a satirical joke to insult the current speculations of hype around the new innovations in the crypto sector.
In 2013, crypto was relatively new as the only popular crypto was Bitcoin and the overall market has not reached its full potential as it is today.
Crypto can only be used for trading and transactions which involve sending and receiving coins and tokens as there are no DApps or Decentralized Applications at the moment.
This is because during that time there are no blockchains that can be used to host DApps as Ethereum only existed prior to 2015.
DOGE was created to mock the innovation so that there is a crypto that has literally no value but can be sent and received through the blockchain, as if they are mocking the innovation that the thing that is being sent and received is worthless.
The founders then abandoned the project and the holders which are the community around DOGE took over the project and made it what it is today.
During the period where the founders abandoned until 2021, the coin rose significantly which triggered a new hype which is called meme coin.
But note that during 2017, there were also some meme coins, but it was not called meme coins at the moment as volatile cryptocurrencies were considered new innovations in the rise of the newly adaptable blockchain called Ethereum.
The existence of Ethereum has managed to create new cryptocurrencies that are volatile but has its own product as DApps only started becoming popular and more developers are creating it.
Volatility Makes it Attractive
The 2021 hype of meme coin has prompted developers to create a project that is solely based on nothing. No product, no plans, just community engagement and token launch.
But, as it has no fundamentals, it is attractive to traders, because the price can be so volatile that it can be utilized for profit.
In these day and age meme coins will gain popularity only if the narrative of that meme coin is related to something.
For example, the current hype is around Solana, so meme coins in the Solana Ecosystem are getting recognitions that is evident by the increasing transaction volume it experienced.
Looking at the data from Coingecko, it can be seen that most of these Solana Meme Coins have risen significantly in a short amount of time.
The price has risen for more than 40% for some even reaching 500% only in a week, which won’t really happen to most cryptocurrencies.
This is why it is attractive to traders as the volatility of the coins or tokens can give traders huge profit in a short period of time.
But, looking at the data, the profit is also correlated with risks, as the coins or tokens can go down significantly in an even shorter period of time.
Looking at the data above, it can be seen that the token that has risen for 500% in a week has gone down around 50% in just one day, showing how volatile the crypto is.
So the term high risk high reward really plays a huge role in this sector, which you need to keep in mind if you are interested in dabbling in the meme sector of the crypto market.
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