Meme coins are still profitable, but not everyone can benefit. Investors told crypto.news how much they stand to gain from the meme coin craze.
Meme coins recorded a staggering average gain of 1,313% in the first quarter, and the sector shows no signs of stopping, generating millions of dollars in profits for traders.
It's natural to see a big price increase over the course of a few days or weeks, but what exactly is this?
What are Meme Coins?
Meme coins are a type of popular cryptocurrency directly related to Internet memes and viral marketing on social networks, usually initially created as a joke with no practical function.
The first and most well-known token was Dogecoin (DOGE), which was based on the popular Shiba Inu meme and launched in 2013. DOGE was initially intended as a parody of Bitcoin (BTC), but over time the asset has garnered a market cap of $1 billion.
The main difference between meme coins and traditional cryptocurrencies such as Ethereum (ETH) and Bitcoin is that they have no intrinsic value and no issuance limits. The cost of meme coins is entirely dependent on the demand of the internet boom, which is why meme coins are characterized by high volatility.
However, recently there has been a trend towards giving meme coins more practical meaning: for example, developers of Shiba Inu (SHIB) and FLOKI are building their own metaverses, NFT platforms, and education ecosystems on top of these assets.
$1 million profit — this year's trends
The number of issued meme tokens is growing with enviable regularity, and traders are successfully making a lot of money from them. However, such success is usually short-term and random. In the long term, as the popularity of the Internet declines, the value of most meme coins tends to drop to zero.
Perhaps those making millions on meme tokens have insider information. Otherwise, how would these traders and investors know when a particular meme coin's price will skyrocket? Editors at crypto.news spoke to some of the potentially profitable traders on the condition of anonymity.
Frog Investments
Members of the Pepe (PEPE) cryptocurrency community are celebrating the Frog token's all-time high, with one user saying he went from just $90 to $1.4 million thanks to PEPE.
In mid-April 2023, a trader bought approximately 6.5 trillion PEPE for fun on the Uniswap cryptocurrency exchange. Due to the small initial investment, the trader decided not to sell the tokens and wait to see what would happen.
This decision turned out to be the best one: in May 2024, 6.5 trillion PEPE would make the anonymous trader a millionaire. However, the user, nicknamed Mina, has no intention of selling his PEPE and now believes that the price of Frogcoin will one day exceed $1.
“Sometimes I feel like selling PEPE, but I try to remember not to rush it. The meme coin market hasn't peaked yet, and PEPE could make me a millionaire within a year.”
Mina, Anonymous Trader
A strong belief in dogs and a love of hats
A trader from the meme coin Telegram community shared an impressive story of profits made on Dogwifhat (WIF) coin. However, this case is different from the inspiring story of a trader whose coin grew 1000x in an hour.
The anonymous trader adopted a different strategy: HODL. He purchased WIF in December 2023, analyzing the overall activity of the Solana network and the growth prospects of the cryptocurrency market.
After considering all the risks, the trader bought around $500 worth of tokens in hopes of further growth, resulting in a profit of around $15,000 just by holding the asset on his balance sheet.
“We've heard stories of traders starting with just $100 and making billions in profits. However, as an active participant in the cryptocurrency community, I consider these stories to be the exception to the rule. The meme coin market remains very opaque and confusing, so any inspirational stories about traders are most likely just insider trading.”
Memecoin Community Members
More conservative
Another crypto community member, who goes by the nickname Andilet, warned investors to be cautious when investing in meme coins and shared a strategy for diversifying assets: He recommended dividing a cryptocurrency portfolio into risk levels and making 10% of the portfolio out of high-risk, volatile coins, including meme coins.
Although the risks are high, meme coins have the potential to generate significant profits, so allocating a portion of your portfolio to them may be a good idea.
“In general, it is difficult to predict how the meme coin market will perform in the long term, because in memes everything is very much driven by hype, and that level is also difficult to predict.”
SHIB investor Andilet
He invested in Shiba Inu in the summer of 2023, spending about $5,000 to buy the coin at a price of $0.0000077. Now, with the SHIB rate at $0.000025, his assets are worth about $50,000.
“In the case of meme coins, I believe that an individual approach to each project is important. By studying the projects in detail, we can infer short- and medium-term trends.”
SHIB investor Andilet
Summary: To invest or not to invest?
Investing in meme cryptocurrencies carries a significant amount of risk. Speculation, timely withdrawal and complete capital loss can bring significant profits. The key is to monitor social networks, read the news, be able to search for information and make sure you pick up on meme coins the first time a media personality mentions them.
