GM frens,
In last month’s crypto aggregate, I discussed how the crypto market revolved around Trump’s Presidential actions and meme coins. It wasn’t obvious then, but the launch of $TRUMP and $MELANIA marked the top for meme coins as it sucked liquidity and attention out of all the other cryptocurrencies. If the launch of both these coins wasn’t enough to end the meme coin mania, $LIBRA was the final nail in the coffin, shattering the illusion that meme coins were “fair launches” to reveal cabals and insiders profiting off almost everyone else.
Some of my thoughts on this:
1. Meme Coins are Dead Now, But They’ll Be Back
It certainly seems like meme coins are done for now, as metrics on pump.fun immediately plummeted following the $LIBRA rug. Both daily newly created tokens and daily graduated tokens on the platform fell by >90% since their February peak. On CoinGecko, the Meme category market cap has fallen by 32% since its peak on February 3, with volumes down an even more drastic 72%.
It’s important to note that meme coins were always “seasonal”, but that also makes those that survive and thrive across cycles, particularly rare. The likes of $DOGE, $SHIB, $BONK have weathered market cycles and offer lessons for meme coin creators looking to build a longer term asset.
Harkening back to Murad’s infamous “Memecoin Supercycle” presentation at Token2049 back in September, the most successful memes are those that have managed to build cult-like communities who are extremely passionate about a cause, who won’t sell and can create content or stories organically.
In an era where there is zero friction to launching a meme coin, attention is literally the product, and low quality memes are not going to go anywhere. Even “higher quality” memes need to be constantly engaging users and retain attention. Those that do these may have a chance to survive.
In the long run, meme coins will probably follow an extreme case of power law, where 99.99% will fail. For the strongest 0.01% that rise to the top, who knows perhaps they may even get a government agency named after it.
2. Are VCs and Regulators to Blame?
Taking a step back, the past year’s meme coin craze really came about due to retail investors’ disappointment of the so-called “Low Float, High FDV” VC-coins that were launched in early-2024. These deals were signed at sky high valuations, and the tokens would inevitably need to be launched at even higher FDVs to generate returns for early investors.
Is the answer for a successful launch perhaps somewhere in the middle? One of the most hyped launch in 2024 was Jupiter’s $JUP, which subsequently drew ire from investors for its “pump protection” launch mechanism. In addition to an airdrop, the team seeded a pool within a specific price range to serve as liquidity for initial buyers and sellers. This meant that the price of $JUP would stay within this price range for the first few days, limiting the volatility typically seen in the first few days of an airdrop.
While this meant that the price of $JUP did not take-off like a rocket immediately, it subsequently reached an ATH of $2.00, close to 3x the $0.70 higher bound of the seed liquidity, while also not falling below the lower bound of $0.40. For longer term projects, such price stability could be preferred to an “airdrop pop”, and then just a steep decline.
Other solutions, such as curated angel co-investing platforms like Echo.xyz, have also been gaining attention, particularly with the recent MegaETH round which allowed retail investors to participate on the same terms as VCs and angels. However as the industry works through its own solutions, part of the blame of the proliferation of meme coins should also go to regulators, particularly in the US, for failing to facilitate an orderly fundraising for tokens with any sort of utility at all.
Without any clear framework to launch tokens without triggering securities law, many projects ended up raising from accredited investors, or jumping through a whole bunch of hoops to arrive at convoluted solutions, or just creating meme coins that promise holders nothing. Hopefully with the new pro-crypto regime in the US, some common sense rules will be put in place and we can all go back to building useful projects with useful tokens.
3. We Still Believe Everything that can be Tokenized, will be Tokenized
Regardless of your views on meme coins, the slew of token launchpads that have mushroomed after the success of pump.fun will only accelerate the tokenization of everything. In addition to meme coins, we now have AI Agent launchpads (Virtuals.io), and also some other interesting experiments with DAOs (daos.fun) or “tokenizing time” (Time.fun).
This is without mentioning the accelerating progress we are seeing in the RWA sector, with major TradFi firms joining the fray. While US treasuries have been the dominant product for the past few years, the sector looks poised to start casting their sights further to more exciting products further out the risk curve.
Where does this leave us? On GeckoTerminal we now track more than 5.5 million tokens, with over 600,000 new tokens being created in January. At this rate, we’ll easily surpass a billion tokens in the next five years.
Circling back to my earlier point, this means that there’s going to be a whole lot of tokens and projects vying for our attention (and money). How these projects are going to attempt to stand out from the rest is going to be very interesting to see. What we saw with meme coins in the past twelve months may only be a precursor for what is to come, and only the most high quality projects or tokens are going to stand out.
Some Final Thoughts on the Current Market
Trump came into office promising some drastic changes to the US government, both domestically and on the international stage, and he certainly seems to be running full steam ahead in implementing some of these changes. While DOGE (the Department of Government Efficiency, not the meme coin) and Elon Musk are enacting massive cuts to the federal government, it’s Trump’s moves vis-a-vis the imposition of trade tariffs, as well as his ongoing role in the Russia - Ukraine peace negotiations, that have rocked markets.
The S&P500 has plummeted by ~5% in the last month, and crypto was also not spared. $BTC fell by >20% from $100k+ to currently $87k within the same time period, and even Trump’s surprise post on a strategic crypto reserve couldn’t stem the losses.
For those that have been around for awhile though, you will know that even in a bull market, it’s never a straight line up. Even during the last cycle, $BTC saw multiple 20+% pullbacks on the way up to the previous ATH of $69k, so periods of volatility is definitely to be expected. Some CT folks, including Arthur Hayes are saying that the current dip may go as low as $70k, which wouldn’t surprise me too much.
I do believe we are still in the midst of a bull cycle, and we are just experiencing a short-term shake-out. The meme markets may be dead in the near term, but there is strong institutional interest in $BTC. Don’t forget, the likes of Standard Chartered and Bitwise were calling for $200k BTC just a month or two ago. There’s still more to come this cycle, so stay safe and don’t get blown-out prematurely. Chat again next month!
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