I’m sure you heard about the “Official Trump” token that’s rising the ranks just days after the inauguration of its namesake. As of writing, it’s the 25th most popular Meme coin in the market, with a buying price of roughly $37 per coin, a 400% spike in less than a week.
But what’s driving the prices of these meme coins, and is it safe to invest in them? Let’s uncover the mystery behind this volatility and see what propels the value of these crypto assets.
What is a Meme Coin?
Typical crypto coins like Bitcoin and Ethical Token are minted with a purpose or intended value. Meme coins, on the other hand, follow a different concept. These digital assets are created based on an internet meme or concept and are most likely rooted in a current trend or fad.
- Did someone achieve a monumental milestone? A meme coin is created.
- An overnight celebrity? You’ll definitely get a meme coin.
- A groundbreaking event happened? Expect a meme coin out in a few hours
Anything impactful happens, a meme coin is soon to follow.
Dogecoin, created in 2013, was the first meme coin based on the then-popular “Doge” meme. Many similar tokens followed suit, like PEPE and Gigachad, along with similarly themed meme coins like Shiba Inu, Bonk, and Floki that follow the doge theme.
What’s Causing the Volatility of Meme Coins?
The rise and fall of a meme coin relies on two things: Hype and Relevance.
As stated in the previous section, meme coins are created based on a meme or a current fad. The more relevant the coin is, the more buyers there are, increasing its value and attracting more buyers. Conversely, once the hype dies down, its price will drop as fast as it rose like nobody’s business.
How do they maintain the hype, then? This is where influencers come in. They use their market reach and popularity to bring attention to the meme coin, giving them a significant boost to prop their name up.
Elon Musk, for example, is the name behind Dogecoin, giving the beloved meme coin a significant boost in the market. Celebrities like Jake Paul have been known to back meme coins and even create some crypto assets as well.
Unfortunately, as everything is tied to a celebrity or popular name, when something happens to the name the product suffers. If the influencer suddenly drops the meme coin, then it instantly loses value. The same goes when they sell their shares without telling the holders, aka rug pulls. Hence, the volatility of meme coins.
So, how should you navigate the world of meme coins? Next time, let’s look at some best practices if ever you want to store some popular crypto assets.
In the meantime, why not stock up on ETHi tokens? They’re rooted in rent-to-own US real estate, giving them stable value that won’t drastically change over time. Plus, they’re halal! Buy ETHi now!
