Memecoins undoubtedly seize a giant slice of crypto observers’ consideration — even when not everyone seems to be a fan. However information exhibits they’re gobbling up a rising quantity of the crypto financial system too.
The sector — powered by the likes of dogecoin (DOGE) and Shiba Inu (SHIB) — made up 3.16% of the mixed market capitalization of all cryptocurrencies on Dec. 1, up from 1.3% in the beginning of the 12 months, based on a brand new report from crypto trade CEX.IO. If you happen to exclude crypto titans bitcoin (BTC) and ether (ETH), memecoin market share jumps to 11.21% from 4.2%.
That equates to massive {dollars}: greater than $140 billion of market worth, per CoinGecko information, stashed in cryptocurrencies that do not faux to have any utility. Extraordinarily unstable by nature, they are typically named after animals, viral web jokes and political figures or occasions.
As bitcoin topples the $100,000 threshold for the primary time, memecoins are additionally rocketing larger. Dogecoin has soared 168% since Donald Trump’s election spurred all through the crypto market. Dogecoin is now the seventh-largest cryptocurrency by market cap at $64 billion, based on CoinDesk information.
The query is whether or not that is simply how issues work within the early phases of a bull market lately, or a harbinger that issues have gotten overheated.
“In earlier cycles, memecoins usually skilled their largest capital rotation towards the tip of the post-halving bull run,” Alexandr Kerya, vice chairman of product administration at CEX.IO, informed CoinDesk in an e mail.
“Halving” refers back to the once-every-four-years occasion — the latest one was early in 2014 — when the reward for mining bitcoin will get slashed by 50%, which frequently correlates with crypto positive factors.
“Nevertheless, this cycle stands out as a result of vital rise in memecoin affect occurring properly earlier than the halving, and persisting even throughout bitcoin’s consolidation mid-year,” Kerya added.
The oldest memecoin, dogecoin, was created as a joke in 2013 and gained vital consideration in the course of the bull market that resulted in 2021 as Tesla CEO Elon Musk repeatedly posted about it on social media. Different dog-themed cash, like SHIB, rode on DOGE’s coat-tails and reached billions of {dollars} of valuation. Over time, memecoins got here to be thought of as a crypto funding class in their very own proper, in the identical vein as decentralized finance (DeFi) tokens, synthetic intelligence tokens or privateness cash.
“Whereas memecoins could finally attain a plateau, just like DeFi, the market remains to be within the means of figuring out the place that equilibrium will probably be established,” Kerya wrote.
Consuming up market share
The memecoin sector underwent explosive progress early this 12 months, the report stated, when the day by day variety of initiatives deployed on Pump.enjoyable — a Solana-based crypto mission that makes it straightforward for customers to launch tokens — went from just a few dozen a day in February to 1000’s per day in March. These days, over 60,000 memecoins are created day by day, half of them by means of Pump.enjoyable, the report stated.
As a sector, memecoins noticed a 330% enhance of their mixed market capitalization over the interval from Jan. 1 to Dec. 1, the report stated. For comparability, bitcoin is up 140% because the starting of the 12 months, whereas ether is up 71%. Memecoin buying and selling quantity grew 979% in the identical interval, and now accounts for five.27% of the complete crypto market’s quantity. Moreover, memecoins retained vital quantity in June whereas different sectors of the crypto financial system noticed declines.
“As a gateway for brand spanking new traders, the expansion of memecoins highlights the rising affect of retail-driven narratives within the crypto market. As a sentiment wager, it displays market optimism and the anticipation of a continuation of the post-halving rally,” Kerya wrote. “Nevertheless, with elevated share of memecoins, it additionally highlights the potential for the quicker look of speculative bubbles. Whereas this might amplify the depth of a bull run, it may also shorten its length.”
The memecoin sector has modified through the years. Dogecoin and Shiba Inu dominated buying and selling quantity and market capitalization in 2021. In distinction, 2024 has seen all kinds of newer memecoins — reminiscent of dogwifhat (WIF), Brett (BRETT), Peanut the Squirrel (PNUT) and Popcat (POPCAT) — crack (or come near) the highest 100 cash by market cap.
And whereas the vast majority of the biggest memecoins have been dog-themed up till March, cat-themed and AI-themed tokens have been stealing market share from canine tokens. Political memecoins additionally fared properly into the U.S. election in November, after which they noticed an 80% drop in buying and selling quantity.
The networks on which buying and selling exercise happens have additionally shifted. Dogecoin has its personal proof-of-work blockchain, which mimics the Bitcoin community’s. Ethereum-based memecoins reminiscent of pepe (PEPE) and MAGA (TRUMP) have additionally seen some recognition. However Solana, due to Pump.enjoyable, is the large winner of the memecoin craze in 2024; the community accounts for 30% of the sector’s buying and selling quantity, and 15% of memecoin market cap is predicated on it.
Nevertheless, Telegram’s TON community’s memecoin buying and selling quantity grew 750 occasions within the final six months, though the blockchain nonetheless solely accounts for 1% of the entire memecoin market cap.
“Given memecoins’ capability to spice up retail involvement and income technology for DeFi platforms, 2025 might see stronger integrations between launchpads and decentralized exchanges to capitalize on this pattern,” Kerya wrote. “Nevertheless, in ecosystems like Solana, heavy reliance on memecoins has raised considerations and will finally backfire, straining its broader improvement.”
