Author: Loopify

Compiled by: TechFlow

I’m not the first person to come up with this idea, nor am I one to wait until things are settled and then express my opinion, which would only be considered as hindsight. But I still want to make a bold judgment: I think the craze for Memecoins is over.

This round of Memecoins craze has basically come to an end. Existing currencies may have a chance to return to their historical highs, but it is unlikely that new currencies will be able to reach a market value of billions of dollars and continue to do so. For mid- and low-market-cap currencies, the probability of a rebound is almost 0.1%.

You can mark the key moments that led to the impending collapse of the Meme market from the chart: $TRUMP was the first coin to trigger the shift, followed by $MELANIA, then a series of other rug pulls, and the last straw that broke the camel's back was $LIBRA.

The emergence of large-scale scams and runaways is inevitable, just as platforms like pump.fun will appear in some form no matter what.

The market has been over-the-top, from extreme rallies (PvE memecoins climbing to billions) to extreme scams (nation-state group rug operations), and most people have either made money or lost money in the process.

No real coin holders

One very important thing to know about the Solana trench: it is entirely driven by market momentum. The vast majority of people buying these tokens are simply looking to make money because the “narrative” appeal of traditional crypto projects has disappeared. This also means that the prices of these coins are falling faster than other coins.

 Albert Murad Einstein Promotes Memecoins

The Memecoin craze was touted as the purest form of trading because it had no restrictions. This was a big reason why they ran so wild. However, this "purity" also brought huge drawbacks.

Once the excitement of making money wears off, holders quickly leave, and those same people abandon the market entirely. Unlike other cryptocurrencies, where holders often have faith in the project itself because it has at least some real value behind it, Memecoins rely entirely on market sentiment and little to no substance.

This also applies to NFTs to some extent, but there is still a difference between NFTs and Memecoins. Memecoins completely abandon the concept of "utility", and there are only a few examples that have broken through the attention barrier and are considered "classic" or "timeless" by the market to some extent, such as $PEPE.

This round of Memecoin fever has also spawned some relatively new phenomena, such as copy trading. In the past, people have always tracked wallet behavior on-chain, but this time the influx of coins has reached an unprecedented level. The improvement of trading user experience (UX) and liquidity issues on Solana has also made this phenomenon more popular.

However, there are already some people who have made hundreds of thousands of dollars through this model. They profit by attracting copycats (this is not referring to a specific person, but a general phenomenon - those who become famous for "making a lot of money" on public wallets tend to attract a large number of copycats, and some people even deliberately take advantage of this).

DEX has had the function of copying orders for a long time, but in the past you could not buy a small currency with a market value (MCAP) of only $10,000 for 5 SOL and sell it for 10 SOL 15 seconds later like you do now.

This phenomenon has led to more people following so-called KOLs into the “incinerator” (i.e., losing money), but unlike in the past, this time there has been little widespread criticism on social media because these traders did not explicitly promote or advertise certain tokens.

Comparison with NFTs

Remember when NFTs were great? I use this comparison because it was a hot topic in the last cycle, just like ICOs were a trend in 2017.

Almost everyone has heard of NFTs. Not only has this trend spread across the internet, it has also attracted countless A-list celebrities to launch their own projects (although most of these projects have ended up running away). The NFT market has a transaction volume of tens of billions of dollars, and the lowest price of many series even reaches six figures.

In that wave of enthusiasm, OpenSea became the biggest winner, with more than $1 billion in transaction fee income alone - in comparison, pumpfun's total transaction volume was only about $500 million.

However, there is one significant difference between the memecoin craze and NFTs: this time there are many protocols that are benefiting from it on a large scale.

@0xngmi: Total “extraction” gains from the memecoin craze on Solana are as follows:

• Trading robots and applications: $1.09 billion
• PumpFun: $492 million
• Maximum Extractable Value (MEV): $1.5 billion to $2 billion
• Trump Insiders: $500 million to $1 billion
• Other insiders: Unknown
• Automated Market Makers (AMMs): $0 to $2 billion
• Total: $3.6 billion to more than $6.6 billion

Even at the lowest estimate, about $4 billion was “extracted” during this round of craze, which is definitely not a small amount. (After all, one of the most powerful people in the world launched a coin that reached a market value of $70 billion in two days, which is not “early”.)

In comparison, I roughly estimate that the total size of NFTs is slightly lower than this figure if market transactions, royalties, and minting income are included.

This shows that the memecoin craze has surpassed the trend of the previous cycle, and the strong liquidity makes the market adjust faster.

Many members of the Solana community are sensitive to the word “extraction” (hence the quotes) and compare it to traditional business models. But I don’t think that comparison is appropriate.

In traditional business, for example, when I buy a game, I get the entertainment value from it, and the company gets revenue. This is a positive game.

You could say a lot of activity in the cryptocurrency market is zero-sum, but many projects are designed to provide some kind of real value.

However, pumpfun is a negative sum game that operates through a value extraction mechanism, similar to a casino whose main function is to create tokens with no real value, and whose core use is simply to speculate or gamble for more gains (of course, this does not include projects that are not specifically targeting Memecoins, such as Jup or Phantom, although these projects benefit the most from Memecoins).

What happens next?

No one really knows when this cycle will end, which will determine the direction of the market in the short term.

A new hot spot will appear in each cycle, but it may also be an evolved version of the previous trend, or a recovery (or a complete death), because people always want to find the next opportunity that can increase 100 times.

Going back to the point I mentioned earlier, I think the chances of Memecoin rising again are lower than other trends because it has no real holders and no believers.

Basically, the biggest coins will survive and the rest will die. If the market comes back, the new coins will likely outperform everything that existed.

You need to be prepared for this situation: survive, survive, and keep surviving.

If you exit the market before the next trend arrives, or if you don’t have the capital, it will be difficult for you to adapt. And in such a market, adaptability is crucial. Everyone can make money in a bull market, but making money in a bear market is a real skill, and then adapting to the next bull market is another skill. (Each cycle requires a different mentality.)

Finally, I recommend an article that goes into depth about why “getting rich” is only half the process, and the other half is “staying rich.” The article also provides some actionable advice:

( Tweet link )

*Side note: If you think an asset is already down 90% and therefore these suggestions are useless, remember that it could drop another 90%.