Back in 1984, a British TV station advertise The Kit Kat Bar scene is set in the offices of a music label, with an enthusiastic young band playing their demo for a bored music executive. Afterwards, they enjoyed the famous chocolate bars, and the manager said:
“You can’t sing, you can’t play, you look bad…you’re going to go a long way.”
This is the closest I can get to explaining the appeal of memecoins to the wise, wise, and smart. But don’t be fooled: smart people make a lot of money off stupid memecoins — always at the expense of less smart people, and not great timing.
Timing is everything for memecoins, which often serve no purpose other than entertainment and making money. So is there a “smart” way you can still make money by trading memecoins without any basis in trading?
Syndika co-founder and head of business On Yavin said a firm “no” to the idea.
“Anyone who says they have a memecoin trading strategy is talking bullshit,” he said, adding that the only reason memecoin is getting attention this year is the bear market and crypto winter.
“People need to do something with their investments, they can’t wait for the next bull market. These people are not interested in investing in actual projects that take years to build. It’s all about the hype, it’s all about making quick money. Here’s why, ” Yawen said.
Vitalik Buterin’s best investment ever is DOGE
But Ethereum co-founder Vitalik Buterin (probably the smartest guy in the entire industry) turned a $25,000 investment in the original memecoin Dogecoin into millions. In 2021, he told podcaster Lex Friedman that he sold $4.3 million in Dogecoin during the 2020 lockdown, when reports suggested his remaining Dogecoin was worth $20 million.
“It’s one of the best investments I’ve ever made,” he said, though he added that when he bought in at $0.008, he certainly didn’t expect such a return. He donated the profits to GiveDirectly.
Tom Mitchelhill is a financial journalist who has worked for various cryptocurrency publications and now writes for Cointelegraph – so he’s definitely on the smarter, well-informed end.
He told the magazine that he found memecoins interesting. Mitchell Hill discovered them early in his cryptocurrency writing career and has been involved with them ever since.
“My interest is finance — it’s a for-profit game — but it’s also fun,” he said.
“They may be silly, but memecoins are also culturally significant. Why else would so many people be involved?”
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Evgen Verzun, director of Kaizen.Finance (a secure blockchain platform for token issuance) is a big fan of memecoin and understands the need to experiment and jump to what you think might be next.
“Let’s say you ‘missed the dogecoin hype train,’ but you still want to be a cryptocurrency millionaire. What do you do for a job? You’re looking for something similar that hasn’t ‘leaved the station,'” Verzun said.
For some 120,000 hopefuls this year, the speeding train leaving the station is PEPE. Based on the popular crypto meme by Pepe The Frog (but not related to creator Matt Furie), the site warns that it’s “totally useless,” which, oddly enough, seems to be part of the appeal.
Mitchelhill is one of them, and he loves PEPE:
“When it comes to PEPE, the latest king of memecoins, the founder made it clear that he has no utility, which made me laugh,” he said.
According to CoinMarketCap, PEPE’s market capitalization soared to $1.5 billion in early May, but prices have since plummeted by around 80%. Since the first draft of this article was written, memecoin’s market capitalization has increased by $250 million to over $600 million, demonstrating the enormous volatility memecoins are known for.
While someone who bought at the top may not have made a smart investment, many smart people made money when the stock price rose and got out before the stock price plummeted.
Mitchell Hill claims that he is not a gambler. He tends to make small investments and hopes to exit with more money. The real kill, he explained, is done by insiders who tend to buy half an hour after a product launches.
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With PEPE, once Mitchell Hill reached a 500% profit, he took the money out. That’s how the smart investor typically operates — some gain, some risk, some reward. It is wise to have a clear plan for when to take profits. The vast majority stick with their investments, hoping to:
a) they will rise further, or
b) They will go back to the highest price.
A three-point plan for trading memecoins
Algorand ambassador and OffChain Ireland founder Sara Jane Kenny, another investor who knows exactly what she’s doing, said her portfolio has grown in the bear market thanks to trading memecoins. She has traded currencies such as DOGE, PEPE, SFM and COOP.
“Everything has pros and cons, and I’m excited to be a part of it. Many memecoins start off as speculation, and then it either grows into a pump and dump, or starts building utility and a strong community around it — these ( The latter) is the type I’m after.”
Her three-point plan for making money in memecoin trading is research, patience, and efficiency.
Using COOP as an example, Kenny looked at the origin of the token, the team, the community, and the progress that is taking place. After selecting a promising token, she considers the most efficient way to trade it, what fees might be involved, the speed of the transaction, and the different prices on different decentralized and centralized exchanges.
She then advocates watching the market and learning patterns over time to see when support comes in and when “selling” starts to happen.
“Buy low and sell high – this is easy on paper but takes a lot of time to get right so practice and take notes as markets can be volatile. Remember to take profits and only invest if you can afford to lose You don’t have to sell everything at once: the dollar costs in and out are averaged to get the most out of each deal,” says Kenny.
She thinks the best memecoins are the ones that have a strong community, are building utility, and have some meaning, even if it’s a joke. That’s why she sees potential in COOP.
For the uninitiated, it’s an Algorand ecosystem coin based on a series of hilariously fictional videos by Cooper Daniels about an influencer’s journey to Bitcoin Beach. Airdropped to the community, Daniels kept zero tokens for himself, triggering a lot of COOP-related content and games, and COOP skyrocketed to become Algorand’s fourth largest token.
“With spam you need to watch out for red flags like the creators who hold the majority of the tokens, if the team isn’t human-searched then the token or the community isn’t making any progress. Oh and also make sure the community isn’t just bots .”
early is the same as right
Flight3 CEO Harry Horsfall is bullish on memecoin. When asked why smart people buy memecoins, he pointed out that early wins.A successful Web3 entrepreneur whose business was recently taken over by Steven Bartlett dragon’s lair Once he became famous, he loved getting involved, because of the excitement, because he felt like he had his finger on the pulse and was ahead of the retail investors.
“I think the PEPE coin is awesome. It’s very clear on the website that it’s not going to do anything and there’s no roadmap. It’s just network effects,” he said.
Horsfall sees people having fun with memecoins, but he points out that there are some serious marketers behind the scenes manipulating the leverage.
“We’re investing in ideas — yes, 99% of ideas don’t work, but there’s always that 1%. If you look at Dogecoin, most people buy it at 0.000…” Here, Horsfall counts Not sure how many zeros there are, but suffice it to say that if Dogecoin hits a dollar, there will be some very happy people.
“It’s a bit like winning the lottery. We’re all on the road, doing our day jobs, but maybe tomorrow we’ll win.”
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NFTs are memes too, really
Neil Bodl, full-time degen and founder of BodlNFT, took time out of his day job to explore dollar cost averaging for Bitcoin and Cardano, but unfortunately, his entry coincided with a bear market. But as the market bottomed out, NFTs caught his attention.
“I’ve always been fascinated by digital collectibles and pop culture. For example, I’ve been following Dogecoin from the beginning, but in general, memecoins need some momentum and a push from the community for it to work.”
Bodl knew of the Pepe The Frog meme for a long time, and having watched the discussion on Twitter, he deduced early on that a memecoin based on cryptocurrency’s most popular meme might soon catch on.
“A meme like PEPE is easier to share than text or words,” he said, tying it all to philosophy.
“The psychology of all memecoins is pretty simple. People only want two things in their lives – bread and a circus. Memecoin fulfills those needs, providing a lot of entertainment and money. Generally speaking. It’s just a matter of balance, Because in this world, no one can have all money and all the fun“.
Experienced traders can make big money using the entertainment angle, Bodell said.
“I’m not ashamed to say I’m a meme admirer, but my stance on memecoins reflects their own philosophy: I see them as the laughing stock they should be. Crypto snobs think memecoins Demeaning and ruining the reputation of the entire cryptocurrency, but I would say that if the industry can be ruined by a bunch of memes, then it probably has bigger issues to worry about,” Verzun said.
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