When buying at the bottom of a bear market, don’t choose Meme projects.
This sounds like nonsense, doesn't it? Who would choose a local dog with a life cycle of as long as a month or as short as a day for long-term investment?
However, the memes discussed in this article are “blue chip memes” such as Doge, Shiba, and Pepe, which have huge market capitalizations and have been listed on major exchanges.
Some people believe that the "new generation of small-cap memes" like Pepe, which are already quite influential, will replicate Doge's trend in the next bull market cycle and achieve the goal of a market value of 10 billion.
But in my opinion, when making cross-cycle configurations, it may not be a good variety to buy at the bottom in a bear market.
The source of Meme token value
Unlike other commercial crypto projects such as DeFi and web 3 Games, Meme seems to have no business model, but its business model is very clear, namely: to provide a speculative medium with great imagination for the general public crypto investors.
The so-called "provided for the general public investors" means that the concept of Meme is simple and fresh, and its concept is either weird or conflicting, so it is easier to capture the attention of the public among massive information.
The so-called "great room for imagination" means that they have no actual business to serve as the gravity of the currency price, and the valuation of the word "consensus" alone can be sky-high.
Even the most serious crypto practitioners cannot deny that “making money through speculation” is an important or even primary driving force in the crypto world, and the endless stream of Meme projects is a response to such needs.
The superiority of encrypted Meme tokens over other traditional speculative targets is also very obvious:
Unprecedented "accessibility". As long as you have a crypto wallet and the Internet, anyone anywhere in the world can participate in its speculation, without KYC, registration, review, identity threshold, and 7 × 24 trading hours. In the traditional financial world, it is difficult for you to participate in the speculative frenzy of Gamestop in 20-21.
Information transparency. Although the code, funds, and rules may still be manipulated and influenced by the Meme issuer, the transparency of the encrypted Meme token information, capital flow, and algorithm has been greatly increased. Compared with the traditional black box Ponzi scheme, the "information starting point" for people to speculate is fairer.
There are many varieties and there is never a shortage of targets. The hard cost of launching and creating a Meme project is very low, and projects emerge in an endless stream, so "there are always many opportunities"
Unlike conventional web 3 business projects (such as DeFi), the growth of the intrinsic value of Meme tokens comes purely from the marginal inflow of future speculators' attention and funds. For the former, we mainly predict the increase or decrease of its business, and for the latter, we need to guess the vote of speculators' attention and funds in the future market.
This also means that the main task of those who operate the Meme project will be to attract and stimulate the public's attention, guide the attention in the correct narrative direction, and strive to promote the spread of Fomo emotions.
The problem is that this is not only difficult, but may not be in the long-term interest of the new generation of meme project operators.
Meme Tokens Lack a Moat
The development of the Meme project has obvious stages:
Conception and design of narrative: Challenge the mainstream, inspire fighting spirit, be absurd and weird to break the routine, but not too far away from the masses.
Early promotion: Attracting the attention of early speculators and whether you can get recommendations from influential people at this stage is the turning point between success and failure
Shaping and expanding Fomo: The wealth stories of early participants are widely spread, greed attracts more people to enter the market, and people believe that the current one they take over is not the last one
Larger-scale adoption: Listing on large exchanges, getting rid of the label of local dog, and becoming a real target of mass speculation
Maintaining attractiveness: defending existing market share of attention and speculative capital
The operation of the Meme project is actually the public's attention, but the shift of public attention is inevitable. The migration of attention is much easier than the user's funds, product usage habits and preference for specific brands.
More importantly, the cost of attempting to create a meme is so low, which means that existing memes face an endless stream of subsequent projects competing for speculators’ attention and resources.
However, facing the competition from latecomers, the existing memes actually have very limited means to maintain their existing attention share. Take Shiba as an example. It started as a meme in the bull market and gained market attention by airdropping 50% of its tokens to Vitalik, a "sexy operation" that was both novel and topical. It took advantage of the surge in Doge and secured its position as the "Prince of the Dog World".
However, after landing on major CEXs, its topicality and ability to attract attention have gradually decreased. Although the Shiba project has made frequent moves, including self-built Dex, self-built L2, issuing NFTs, and developing metaverses and games, trying to transform from a pure Meme to a business project, both the business performance and the price of the currency are disappointing. Its DEX Shibaswap has a TVL of only 21 million US dollars, and the price of the currency has far underperformed the market in a year.
Memes have a hard time cycling through
Doge is also a positive example of the fact that the vitality of most memes decays with the cycle. This is because Doge's outstanding performance in the last bull market was the result of the huge personal influence of Musk. "The project of the world's richest man Musk" itself is a new meme for Doge's takeoff. If Musk's explicit or implicit support for Dogecoin since 2019 is excluded, I believe that the meme element of Doge itself has long faded in the ever-changing crypto narrative.
So the question is, how many people in the world have the same charisma as Musk, who will inject their influence into Pepes in the next cycle and give old memes a new life in the bull market? There are already only a handful of people in the world who have the same level of influence as Musk, and with the condition of "standing up and shouting for a meme", the list of people who meet this double standard is empty.
In fact, the best counterexample to the saying that "Meme coins cannot survive cycles" is not Doge, but Bitcoin. As the originator of meme coins, it is still the favorite of new and old crypto investors and the ballast of asset allocation. However, as the first meme in the history of crypto investment and the starting point of all crypto projects, Bitcoin's meme power comes from its unique and scarce "orthodoxy".
This kind of "orthodoxy" is something that no other meme possesses, so they are destined to face competition for attention from generations of new memes.
Investing in Meme is, after all, a highly skilled skill that requires “short, flat, and fast” results.
Later, I will bring you analysis of leading projects in other tracks. If you are interested, you can click to follow. I will also organize some cutting-edge consulting and project reviews from time to time. Welcome all like-minded people in the cryptocurrency circle to explore together. If you have any questions, you can comment or send a private message