With a cheeky nod to meme culture, the PEPE token is a lesson in crypto community power. It’s less about fundamentals and more about shared culture.
and so on — to drive demand for their coins. Therefore, even large institutions are open to investing in them. Memecoins lack that utility narrative. Crypto Twitter has gotten excited several times by inferring that Elon Musk might have plans for Doge as a method of value exchange on the platform.
However, any potential plans have yet to materialize. Therefore, as it stands, memecoins rely on meme culture rather than real-world utility. Nonetheless, the influence of culture should not be underestimated. The NFT asset class in Web3 has shown that culture could bring communities together and help drive huge sums of capital toward it. Memecoins might just be a fungible and a more liquid equivalent of NFTs.is not on, it must be noted that there is often limited liquidity within the system. During periods of increased liquidity flowing into memecoins, NFT floor prices may decline or established cryptocurrencies may decrease in value. Investors sell some of their holdings to tap into the memecoin run. It is also worth noting that this movement of liquidity happens even within memecoins. For instance, there are just over 174k and 30k wallets that hold Pepecoin and Turbocoin, respectively, as of May 15, 2023. Yet, of the 30k Turbocoin holders, over 14k have held Pepecoin at some stage. That is nearly 50% of the investors going into a subsequent memecoin within the ERC-20 token ecosystem. This trend was also noticeable on Solana, where the top two coins by the number of wallets, namely Guac and King, had several thousand wallets in common. On both Ethereum and Solana, it was the same liquidity moving across memecoins. Speculators were picking up a coin, buying it for others to follow and then dumping it on the latecomers. Needless to say, the memecoin space is perhaps too risky to even think about having regulators address it. Also, with only a few hundred thousand wallets involved in the memecoin space and the overall market cap of memecoins at less than $16 billion, it is still in the early days. Yet, it is a huge regulatory risk for the firms launching memecoins, as they are currently perceived as the most speculative bet within cryptos.Over the years, the crypto industry has created several “rags-to-riches'' stories based on culture. Memecoins are one of them. The industry has only seen two previous instances of such models holding value through a tough bear market and consistently performing well from an investment perspective — DOGE and SHIB. Pepecoin is perhaps only the third significant example of this trend. Therefore, it is too early to know if memecoins have a future. If culture-based asset creation becomes a significant economy within cryptocurrencies, with a number of such ecosystems emerging with big market capitalizations, that would be one data point. These culture-based ecosystems must also hold value across a number of Bitcoin cycles and hit respectable milestones, like a $1 trillion market capitalization. That would then become undeniable evidence that the crypto world has unearthed a new asset class that is here to stay. Until then, memecoins like Pepe remain at the extreme end of speculation within the crypto ecosystem.
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