The hype of meme coins has lasted for more than half a year since March and is still hot. The core reason is that this round of currency cycle has not produced any substantial applications or paradigm innovation. The phenomenon of "reinventing the wheel" in the altcoin projects incubated by institutions is too common. Analysts at StarEx Exchange believe that retail investors are tired of the game of cutting leeks.
This has led to the current extreme polarization: large institutional funds only buy BTC under the leadership of ETFs, while retail investors are only willing to speculate in Meme coins, and no one is interested in altcoins. Institutional and retail investors have differences in investment direction, with institutions mainly investing and retail investors mainly gambling.
After Trump's election, Wall Street institutions bought hundreds of millions of dollars of BTC every day, pushing the price of Bitcoin up to nearly $100,000. The influx of these institutional funds reflects the further deepening of Bitcoin's status as digital gold and an anti-inflation tool. Against the backdrop of increasing macroeconomic uncertainty, Bitcoin has become an important part of traditional institutional asset allocation.
The market value of BTC has reached trillions of dollars. For these long-term institutions, it is a stable and safe investment target. However, for retail investors, the wealth effect of BTC is gradually disappearing. With high prices and low volatility, it is far less attractive than other assets.
In contrast, retail investors’ interest has turned to Meme coins, which have high volatility, low thresholds, and low market capitalization, becoming the first choice for retail investors’ short-term speculation and bringing about a huge wealth effect: thanks to Musk’s social media shouting, DOGE’s market capitalization exceeded $60 billion, SHIB exceeded $15 billion, and PEPE also successfully reached the $10 billion market capitalization mark. Second-tier Meme coins exploded, such as ACT, PNUT, etc., which rose dozens of times in just a few days after being listed on Binance, and their market capitalization even exceeded $2 billion.
The market capitalization of some second-tier Meme coins easily surpassed the industry-leading coins in traditional copycat projects in a very short period of time. This brought about a huge wealth effect, and retail investors rushed in frantically under the lure of potential skyrocketing potential.
The market value of first-tier meme coins has exceeded 10 billion US dollars, which has greatly increased the growth potential of the Meme coin market value. In the past, a market value of more than 100 million US dollars was considered the limit. Now meme coins worth 1 billion US dollars or even higher have emerged, and retail investors who were able to participate early have received obvious returns.
Compared with the popularity of Meme coins, the valuation of traditional altcoins is extremely embarrassing. According to Bloomberg, venture capital in the crypto field in Q3 2024 was about $1.7 billion, a figure that is even less than the market value of some Meme coins that have grown in a few days. The altcoins incubated by institutions are gradually being abandoned by retail investors due to the lack of innovation and wealth effect.
Analysts at StarEx Exchange believe that the Meme coin cycle may run through the entire market cycle. At present, the status of Meme coins in the crypto market continues to rise, and even begins to form a craze similar to the ICO in 2017 and the DeFi craze in 2020. As long as the market does not enter a full bear market or an innovative ecosystem emerges, the Meme coin craze will be difficult to subside.
In the current crypto market, Meme coins are extremely active in the primary market, especially projects on the SOL chain. Retail investors can participate in hot projects in the primary market. If they are lucky, the top exchanges such as Binance and Upbit will list related projects, and their market value often goes straight to 1 billion US dollars. With the Meme coin craze, the SOL ecosystem may continue to benefit from this trend.
Analysts at StarEx Exchange believe that while institutions continue to push BTC into a long-term bull market, retail investors are chasing the wealth effect of Meme coins, and this differentiation may continue for a long time. For institutions, if they cannot break the current plight of altcoins through paradigm innovation, more funds in the market will flow to Meme coins, further shaking the status of altcoins.
Embracing meme coins and watching altcoins may still be the right choice.
