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Meme Coins vs Value Coins |
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Linfeng (Daniel) Zhou |
Recently, there's been a trend suggesting that value coins are worthless and that meme coins represent the future.
While I've criticized overvalued VC-backed coins multiple times, holding the above view might cause one to miss the next big opportunity.
First, it's essential to distinguish between value coins and high-market-cap coins.
Those high-market-cap institutional coins are indeed bothersome. In my referenced articles, I've analyzed that the core issue is excessive confidence in this bull market, leading to massive capital inflows into the primary market, causing inflated valuations. These institutional coins ultimately cash out in the secondary market, exploiting retail investors. As secondary market traders, we should steer clear of such coins.
However, aside from high-market-cap institutional coins, many project tokens exist. The current market is tough, with numerous tokens suffering continuous declines. The main reason is that we just went through a wave of speculative hype, with significant gains across altcoins, leading to severe project bubbles. Adjustments are entirely normal. We can't blame value coins for this.
On the contrary, after a market correction, some projects' prices will become attractive, presenting a great opportunity to buy at a discount.
Meme coins have their appealing aspects. Firstly, a key point is that meme coins are 100% fully circulated, unlike institutional coins that are slowly released, constantly cashing out. Secondly, most meme tokens are fairly launched (though the mechanisms may vary), providing retail investors with early participation opportunities. Additionally, meme coins are simpler. Unlike value coins, which require research and understanding of various mechanisms and tokenomics, meme coins don't need such effort.
However, meme coins also have their issues. The biggest problem is the sheer volume; because they are easy and cheap to create, anyone can launch one. For instance, Solana sees over 10,000 new meme coins daily. Most of these die within a day, making it extremely challenging to find profitable ones. Furthermore, meme coins can have hidden tricks, such as project teams grabbing a large amount of tokens at launch, creating an illusion of full circulation. Moreover, both individuals and institutions can manipulate meme coins to exploit retail investors.
Selecting investable meme coins from the vast pool is a formidable task due to the lack of standards. If we try to find a formula for selecting meme coins that can bring significant profits, we'd need to identify consistent factors. However, applying these factors to predict other meme coins' success often proves ineffective. For example, if a meme coin succeeded due to a famous artist's involvement, it doesn't guarantee success for other artists' meme coins. Similarly, if another meme coin succeeds because its liquidity and airdrop tokens were accidentally burned, it doesn't mean the next one will follow suit.
In conclusion, while high-market-cap institutional coins are indeed bothersome, it's unfair to dismiss all value coins. Meme coins and value coins operate under different logics and investment approaches. When the next wave comes, exclusively believing in meme coins might not lead to the best outcome.