Do Memecoins still have a future?

Do Memecoins Still Have a Future?

In 2021 and 2022, Memecoins managed to inspire tens of millions of people and sparked massive price rallies for Dogecoin (DOGE) and Shiba Inu (SHIB). But the shine has largely faded recently, as evidenced by a look at the current state of Memecoins.

Memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) have an advantage: they were able to reach the masses and won tens of millions of enthusiastic investors within a short time. But currently, the glory days of Memecoins seem to be gone.

For almost a year now, prices for Dogecoin, Shiba Inu, and other notable Memecoins, such as Pepe or Baby Dogecoin, have mainly known one direction: downwards. The endless stream of tweets from Elon Musk, which used to provide bullish impetus, has dried up. And a look at the metrics that measure the presence and interest in cryptocurrencies on social media confirms: Memecoins have been pushed back in significance in the crypto scene.

If you dig deeper, you will come across comments like those from Meltem Demirors, who, as crypto Chief Strategy Officer at CoinShares, summarizes the growing skepticism: Demirors calls Memecoins “a casino-like game” and believes the hype surrounding them to be highly imbalanced. Demirors and other experts see little reason to trust Memecoins in their current form as long-term investments. Instead, according to them, it is a matter of gambling and wanting to exploit volatility kindly.

The fundamental idea behind Memecoins has not changed: a combination of a funny mascot, quick accessibility through swaps at major crypto exchanges, and influencing social media contribute to the nature of Memecoins. While this business model was potent in a familiar climate and generated impressive returns at times, this concept is currently failing. In numbers: Dogecoin experimented with testing new highs at the end of March 2023, yet today, its price is around 0.06 US dollars. In January 2023, Dogecoin was still trending about 20 percent higher.

For Shiba Inu, similar developments can be noted, and emerging projects like Pepe are not adding fresh perspectives. The current economic backdrop is an aggravating factor: when interest rates rise, cryptocurrencies and especially risky bets like Memecoins appear less appealing as potential speculation capital flows into conventional investments.

In conclusion, it can be noted that Memecoins might not be completely without a future, but their appeal is heavily influenced by the market environment. As long as attention and financial capital flow more significantly towards tangible use cases, such as Decentralized Finance (DeFi), GameFi, or Web3, Memecoins remain relatively niche products in the crypto space.