Ever since Bitcoin exploded onto the scene and made early believers and investors some of the biggest returns on investment possible, hundreds of millions of people are now trying to replicate that and find the next Bitcoin.
While cryptocurrencies are still going strong, despite the huge drop they had at the start of last year, finding the next Bitcoin is not something that will happen easily as the market has become very competitive. While Bitcoin was the first crypto on the market, currently there are over 24,000 cryptocurrencies and this list is expanding each day. We see investments and people’s beliefs being spread around different tokens and no one token has managed to grow as big as Bitcoin. Currently, there are basic cryptocurrencies, governance tokens, utility cryptocurrencies, and, the topic of our article, meme tokens.
Ever since Dogecoin went to the moon due to an Elon Musk tweet, it has cemented itself as one of the top cryptocurrencies, and people started to look at meme tokens as possible investment opportunities. But are they any good? Let’s take a look at what meme tokens are in general and if they are investment worthy.
What are meme tokens?
Meme tokens are regular cryptocurrencies that have been given the title of “meme”. The reason for this name is the reason these tokens were created and the concept they carry. Meme tokens are created to make fun of something and don’t have any long-term goals or serious plans for the future. For example, the largest meme token, Dogecoin, was created in 2013 just to make fun of speculators at a time when Bitcoin was growing significantly. Cryptocurrencies are already speculative assets and they don’t have anything backing their value, and meme tokens go even further, as the majority of them don’t carry any value within the crypto space either.
Ever since Dogecoin and then Shiba Inu rose in popularity and become two of the largest cryptocurrencies on the market, we started to see a surge of meme tokens flood the market, with people creating cryptocurrencies about anything. Since there have been a lot of advancements in the crypto space, creating your own crypto has become extremely easy and you can create one in just a few hours with zero prior experience. What this means is that you can even create your own meme token. But are the meme tokens present on the market investment worthy?
Should we invest in meme tokens?
As the name suggests meme tokens are there just to make fun of something, but looking at Dogecoin and Shiba Inu, two meme tokens that have managed to hit the top 10 cryptocurrencies by market capitalization list, there is something behind these tokens that might not be just for jokes. But the question is, should we invest in them? In general, the answer is no, you should not invest in meme tokens, but there is more to it.
Meme tokens are notorious for pump-and-dump schemes, like in Forex and Stocks, where creators of the token create hype behind their tokens to make people buy this crypto. Once the prices go up, the creators, who hold very large amounts of tokens, sell their shares of tokens and take out big profits, consequently dropping the value of the token to nothing and making it irrelevant. Meme tokens are also closely related to social media trends and famous people active on these platforms. For example, we would not have Dogecoin as one of the largest cryptocurrencies on the market if Elon Musk did not tweet a few times that he liked the token. The same goes for Shiba Inu, as musk made a few comments on the token and the price skyrocketed. This is not true for these two cryptocurrencies alone, while these were the ones that managed to somewhat maintain their growth, there have been other tokens that have risen in value and then sharply dropped. Just a few months ago, Vitalik Buterin, the creator of Ethereum, posted a photo where he was wearing sports trousers and you could make out his private parts, Once people saw this picture, in just a few hours, a cryptocurrency surrounding his private parts was being traded and gaining decent value, only to then drop significantly in just a few hours.
As you can see, meme tokens are something that can not be given a proper valuation as they are simply dependent on trends. So when it comes to investing in these tokens, it is probably too late to invest in a meme token that has already gained popularity, since they most likely have already hit their peak and will never see those same highs again.
But we know Dogecoin and Shiba survived this meme token death cycle, meaning there is still some hope. But if we take a closer look, we can see why these tokens succeeded and others did not. Both Dogecoin and Shiba Inu creators did not fully reap the benefits from their tokens and once things got serious and their tokens picked up popularity they dropped the meme token title and started treating them as regular cryptocurrencies. Dogecoin has its own blockchain and is a high-quality, open-source, peer-to-peer decentralized cryptocurrency used by many people. Shiba Inu created its own metaverse and is taking things very seriously. While it is still unlikely that these tokens will reach the levels that they did during their peak if you are looking for investment, these two cryptocurrencies, Dogecoin in particular, should not be a bad token to add to your investment portfolio. Other than these two, investing in meme tokens is a death sentence for your money.
How to take advantage of meme tokens?
While investing in meme tokens is not advised, there are ways to take advantage of these tokens. As we mentioned, meme tokens are commonly used for pump-and-dump schemes, where people create tokens related to trendy things at that moment and once the price goes up, people start selling to take out profits and the value of these tokens drops really low.
This is where you can take advantage. If you spot a meme token that has just started to gain value, you can buy this token and then sell it shortly after to make good profits. But you should approach it with much caution and make sure to not buy into these tokens at the end of their value spike. When doing this type of trading, make sure you have take-profit and stop-loss orders in place to limit potential losses. Other than this, getting involved with meme tokens is risky and should only be done if you are investing an amount of money you can afford to lose.
FAQs on whether you should invest in meme tokens
Do meme tokens have a future
Meme tokens don’t have any future as long as they maintain the meme token status. Dogecoin and Shiba Inu, the two largest meme tokens, are nothing like others. These tokens have approached this subject with professionalism and have shifted their token to resemble more real cryptocurrencies that have given them proper usage and are not simply there to meme on something. Other meme tokens, which have not moved away from meme titles, will most likely never succeed and will remain on the lowest step of the crypto market hierarchy.
Can you make money from meme crypto?
Since meme tokens are commonly used for pump-and-dump schemes there is a way to make money from them. If you spot a meme token that has just started to gain popularity and its price has not skyrocketed yet, buying this token and selling it shortly after is a good and fast way to make profits. But when doing so, you should always have damage control mechanisms in place, such as take-profit and stop-loss orders, to make sure that you don’t lose your money. We would also suggest only dealing with meme tokens with money you are ready to lose and never investing an amount of money that, if you lose it, will have a significant impact on your life.