In the crypto world, memecoins like Shiba Inu (SHIB), Pepe (PEPE), and Floki Inu (FLOKI) have attracted attention due to their rapid growth and large communities. However, the recent collapse of these cryptocurrencies is being described as the bursting of the memecoin bubble. In this article, we will explore the reasons behind the collapse of these three cryptocurrencies and its impact on the cryptocurrency market.
Reason
1️⃣ Speculation and exaggeration
Memecoins typically gain value through strong community support and social media hype. However, the value of these coins is often based on speculation and lacks lasting value because they have no practical or technological application. Once the hype fades, the value of these coins can plummet quickly.
2️⃣ Market manipulation
The value of memecoin can be manipulated by large investors. Known as a "pump and dump" strategy, this tactic can cause prices to rise suddenly and then fall rapidly. This situation leads to significant losses for small investors.
3️⃣ Regulatory and legal issues
Regulatory measures and legal restrictions imposed by many countries on the cryptocurrency market may negatively affect the value of memecoin. Tightening regulations and legal uncertainty keep investors away from such high-risk assets.
4️⃣Lack of trust
Memecoins, often created with humorous or entertaining themes, are not considered a reliable investment vehicle by long-term investors. This lack of trust can cause investors to quickly exit these assets when the market turns volatile.
