As memecoins continue to captivate the crypto community, questions about their longevity have begun to surface. Crypto executives are increasingly skeptical, suggesting that the bumper returns currently attracting new investors might not last.
During an Aug. 13 panel discussion at Canada’s Futurists conference, Jelena Djuric, CEO of Appchain Noble, expressed doubts about the future of memecoins. While acknowledging that the memecoin season is still ongoing, Djuric compared the current craze to previous retail manias, such as Initial Coin Offerings (ICOs) and Non-Fungible Tokens (NFTs). She predicted that, like these earlier trends, the memecoin frenzy would eventually subside.
Djuric highlighted that the initial phase of retail engagement with crypto was driven by the ICO boom, which began in 2017. ICOs presented early retail investors with significant returns, but the opportunities for such returns have diminished over time. The ICO boom saw an impressive $4.9 billion raised in 2017, a figure that soared to $33.4 billion by 2018. However, the excitement was short-lived, with fundraising dropping to just over $370 million by 2019.
Similarly, NFTs experienced a meteoric rise in popularity in 2020, accompanied by exorbitant prices. The most notable example of this surge was digital artist Mike Winkelmann, also known as Beeple, who made headlines when his NFT art “Everydays: The First 5000 Days” sold for over $69 million in February 2021. However, the market for NFTs has since cooled, with prices for many assets, including Beeple’s, significantly lower than their peak.
Djuric sees memecoins as the latest phase in this pattern of retail enthusiasm. As of Aug. 14, CoinGecko lists 1,673 memecoins, with a combined market capitalisation of approximately $41 billion. Despite their current popularity, Djuric believes that memecoins are unlikely to maintain their momentum indefinitely.
The rise of memecoins, according to Djuric, was largely driven by favourable conditions in the market. She pointed to low gas fees on the Solana blockchain, which facilitated high-volatility trading, as well as pent-up demand following the DeFi summer and the NFT boom. These factors created a perfect storm that allowed memecoins to thrive.
However, Djuric is not alone in her scepticism. Dean Skurka, president of asset management firm WonderFi, also acknowledged the potential impermanence of the memecoin trend. He noted that while not every memecoin or speculative investment would result in a win, the phenomenon has played a crucial role in onboarding new users into the crypto ecosystem.
Skurka argued that platforms should embrace memecoins while they are still popular, as doing so could help attract more people to the world of crypto. By facilitating conversations around memecoins and other trending topics, platforms have the opportunity to educate new users and guide them towards more stable investments like Bitcoin and Ethereum.
The social and community aspects of memecoins have also contributed to their success. Skurka observed that retail trading, particularly with memecoins, often has a strong social element. This sense of community can be a powerful draw for new investors, even if the financial rewards are not always guaranteed.
As the memecoin trend continues to evolve, it remains unclear whether these tokens will follow the same trajectory as ICOs and NFTs. While some believe that memecoins are destined to fade into obscurity, others see them as a valuable tool for bringing new users into the crypto space.
Ultimately, the future of memecoins may depend on how well the crypto community adapts to the changing landscape. If platforms can strike a balance between embracing the latest trends and promoting more sustainable investments, they may be able to retain the interest of new users long after the memecoin mania has passed.
For now, the crypto world will continue to watch the memecoin market with interest, as the latest chapter in the story of retail engagement with digital assets unfolds. Whether memecoins will go the way of ICOs and NFTs, or whether they will carve out a lasting niche in the crypto ecosystem, only time will tell.