Among the 10 most popular cryptocurrencies in Brazil, eight are memecoins
If there's one thing Brazilians like, it's betting. Between “doing a thing” at gambling and playing online betting, the behavior of playing with luck has recently flooded the cryptocurrency market, which is already quite risky in nature. Among the 10 most sought after tokens in the country, according to data from the CoinGecko aggregator, eight are memecoins, cryptocurrencies inspired by memes or internet jokes.
While investing in famous cryptos such as Bitcoin (BTC) and Ethereum (ETH) already requires a good dose of caution, care must be taken when placing money in memecoins such as Dogecoin (DOGE), Shiba (SHIB), Floki (FLOKI) and Pepe Coin (PEPE), among others that are even newer and more unknown – and with even more risks involved.
“It’s almost like a casino. When entering into a memecoin, it is good to know that you could eventually lose everything and that the balance is in favor of the loss side”, said Vinícius Terranova, founder of Fund Research.
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But there are people making money from it. “I invested around R$3,500 in Shiba [Inu, a dog-themed cryptocurrency] in 2022. I turned it into R$30,000. I also put R$3,000 in Baby Dogecoin and ended up with R$15,000. But it's important to make it clear that it was all very risky, it was a gamble”, says Alex Junior Guimarães, 24, who started investing in memecoins around five years ago. In addition to SHIB and BABYDOGE, he also said he had already purchased DOGE and PEPE.
“Anyone who wants to start should risk little, at most US$10, to try to appreciate 10 or 1000 times the value. But there is no guarantee”, says Conrado Magalhães, 35, a former political analyst who currently works at a company in the financial sector. It guarantees that your bets on memecoins are small, ranging from 2% or 5% of your cryptoasset portfolio. Another investor who spoke to the report and preferred to remain anonymous said that he allocates only 1% to meme-based assets.
What are memecoins and why are they dangerous?
Memecoins are cryptocurrencies that appear motivated by jokes on the internet, and their main problem also comes from there: they are maintained only because of the repercussion they gain on social networks. The revenue makes them much more volatile than the already speculative Bitcoin market.
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A recent example is the memecoin StarShip (STSHIP), inspired by Elon Musk's SpaceX rocket. The price plummeted 80% on the day the aircraft was launched, which flew into space, but crashed and exploded on Earth. Something similar happened with a crypto based on the singer Kanye West: an unknown person allegedly bought the Instagram account of a Brazilian woman who was followed by the rapper, and used the profile to promote a token that soared 3,500%, but “evaporated” within some hours.
This type of thing happens because anyone with basic programming knowledge can create a cryptocurrency, which opens the door for scams. In the past, Brazil was flooded with crypto dogs, cats and even turtles. Whoever put in the money lost everything. Memecoins are often pump and dump schemes, a type of fraud in which scammers accumulate a certain asset, inflate the value with false recommendations and then sell it to keep the profit, using unsuspecting investors as liquidity.
In the world of “betting” on memecoins, the “house” always has the advantage. “Most likely, there is someone with a huge position in a specific token, which they acquired at no significant cost. This individual is playing the market, watching the chart and trying to attract liquidity. Periodically, he may undertake a substantial sale, causing a sharp drop in price. This could lead people to perceive the token as cheap and start buying”, says Magalhães.
Where are memecoins for sale?
Unlike more well-known cryptocurrencies, most memecoins are not available on exchanges. To find them, you need to enter the “underworld” of decentralized finance, where anonymous users use digital wallets like MetaMask and Phantom to navigate systems without central control.
Currently, one of the most used tools for finding memecoins is the Dex Screener, which allows you to track cryptos that are rising the most in the last minutes or hours, view market capitalizations, numbers of individual wallets that purchased an asset, liquidity and prices with time intervals very short, like a minute.
“Many investors use this tool to scan the environment in search of interesting tokens or those that have shown a significant drop in the last 24 hours and started to show an upward trend”, says Magalhães.
Prominent memecoins in recent months were created on the Solana (SOL) network. The latest success is dogwifhat (WIF), a crypto inspired by the dog wearing a beanie meme. Driven by a loyal community, which recently raised US$690,000 in just four days to display its mascot at the Sphere music arena in Las Vegas, the token has reached US$3.2 billion in market value. Recently, the MB exchange listed the asset in Brazil. In February alone, memecoin soared 600%.
Two other memecoins that soared were Bonk (BONK) and Jupiter (JUP), both from Solana. BONK soared 4,000% last year, a movement that helped boost the price of the SOL token. JUP, launched this year, rose almost 90% in the month.
For Terranova, from Fund Research, currencies may have exploded in value, but he asks: “how many others went to zero?” According to a report by the aggregator Coingecko published at the beginning of the year, of the 7,530 cryptocurrencies created in the sector's last boom cycle, between 2020 and 2011, 53.6% “died” – a large proportion were memecoins. “The truth is that I never recommend that anyone buy a memecoin thinking about making it their main means of earning capital in crypto. I prefer people to follow the fundamentals path, which tends to be more consistent and profitable,” said Terranova.
