The memecoin trading trend is back as PEPE, Chad Coin (CHAD), Shib Original Vision (SOV) surge. Experts believe that the recent rise in meme coins may not be sustainable, and that these projects represent a micro-bubble in cryptocurrencies and are particularly risky compared to other tokens in the ecosystem.
Meme coins: The next big story or a fad?
PEPE, CHAD, and SOV are currently popular emoji coins on the Internet. The transfer of capital from Bitcoin and altcoins to memecoins has inadvertently contributed to the price surge of such projects.
Although lucrative, memecoin is a highly controversial token in terms of the risks involved. Cole, a cryptocurrency expert and market maker at Eigen Protocol, described token memes as “microbubbles.” Microbubbles are a group of tokens that are particularly risky relative to other projects in the overall market.
Micro-bubbles like the ongoing meme coin craze seem to either end with zero general market volatility or leave participants hoarding, triggering a larger vapor bubble
– Cole (@cole0x) April 23, 2023
Compared to Dogecoin, Shiba Inu, etc., PEPE, CHAD, SOV, and other token memes have turned out to be huge profits for many with relatively small market caps. This reflects the relatively low liquidity of holders of these tokens.
The monetization of coin memes may not be sustainable
Experts believe token memes are avenues for “DeFi regression” or pose relatively higher risks compared to other market participants. @00forrest, a crypto trader shares his journey to 6x profits on a meme coin project with no website, no twitter account and just launching a contract on Etherscan.
The expert explained that he caught the project early and made 6x profits from it, but did not reveal his name for fear that other traders on Twitter would jump into the project and lose money.
I went up 2 times.
Sell or go to sleep and hope to wake up to a 6 figure gain?
— forrest.y00tstreet.eth (@00forrest) April 24, 2023
Why is the painting meme coin craze important?
It’s worth noting that sharp increases in the price of memecoins often signal the beginning or end of a trend in the crypto market. Rebounds usually occur after a long period of consolidation. Consolidation often follows a bull market before taking the next step in the crypto market.
Experts warn traders to exercise caution when dealing with coin memes.Binance CEO Changpeng Zhao warned traders on Twitter not to fund meme token projects without first conducting due diligence, such as Bitcoin Magazine report.
Cryptocurrency expert and trader Altcoin Sherpa agrees with CZ and believes that the bull market for meme coins is unsustainable, although a 500x increase in a short period of time is possible.
They are a bit like the original NFT in many ways. Meme Coin is built around a simple idea that is easy for people to understand (i.e. dogs). You don’t need a brain to understand it, and you don’t need to go through complicated steps to use it (i.e. DeFi).
— Altcoin Sherpa (@AltcoinSherpa) April 18, 2023
New token meme catches attention of DOGE, SHIB
The meme of tokens generating 5x returns in a short period of time caused traders to take their attention away from large market cap projects such as Dogecoin and Shiba Inu. Two of the biggest coin memes in the ecosystem have lost all of their gains from last week and are now struggling to recover from double-digit losses.
Large wallet investors on the Ethereum network have acquired Dogecoin disruptor Shiba Inu, indicating a bullish sentiment among traders. According to cryptocurrency analyst Akash Girimath, SHIB prices are expected to rise by 20%. According to the expert, SHIB is consolidating in the range of $0.0000101 to $0.0000117 and is therefore tightly bound. If buying pressure persists and increases in the short-term, expect an increase in coin memes.
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According to FXStreet