Memecoin Market Decline, Chaotic Competition Among New Coins
Working Title: "Top Meme Coins Face Challenges Amid the Rise of Stable Release Tokens"
@Mark, you have extensive knowledge of the cryptocurrency and stock markets. This topic concerns the difficulties the top meme coins are facing in the market and how new stable release tokens are encroaching on their market share. I believe your overall insights into the cryptocurrency market will be helpful, so I'm assigning this task to you. Please take care of it.
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Let's start the analysis.
We can observe that the current meme coin market is highly unstable. The major players in this market, such as Dogecoin, Shiba Inu, Pepe, and Dogwifhat (WIF), which saw explosive growth throughout 2024, are struggling to maintain their annual highs. According to data from Lookonchain, the average decline rate for major meme coins is around 63%. This downward trend is accelerating as the rules of the game in the meme coin market are changing.
The primary reason for this change is the emergence of new 'safe-launch' services. Platforms like Pump.fun and BaseJump have made the issuance of new coins much more accessible than before, lowering technical and financial barriers to entry in the market. This has, in turn, intensified competition within the meme coin sector.
According to Ilias Salvatore, the current market operates on the principle that "money flows where interest lies." Pump.fun and Solana are trending, attracting traders looking for new potential, and targeting a different type of trader than leverage trading. Thus, traders are moving more quickly to newly issued coins, with most safe launch tokens having a short life cycle of a few hours to days.
However, the number of meme coins has surged, increasing the associated costs. On Pump.fun alone, over 1.98 million tokens have been issued since March. Yet, only the top 1.3% have been evaluated as successful in the market. This environment makes it difficult for users to find winning tokens, leading even experienced traders to liken the current meme coin market to a "slaughterhouse."
Additionally, meme coins are causing liquidity issues. Some experts warn that meme coins are siphoning vitality from the current bull run. This trend is reducing liquidity in the altcoin market, negatively impacting the entire cryptocurrency market.
Compiling the views of Evan Luthra and Slava Demchuk, meme coins exhibit characteristics closer to a 'pump and dump' scheme rather than true value creation. Furthermore, according to Carlos Mercado's analysis, meme coins drive traders to seek short-term profits, making long-term investment challenging.
According to Josh Benaron, the current meme coin market is growing too fast and too large, ultimately leading to its self-destruction. There is insufficient demand to sustain the continual generation of new coins. Supporting data includes the daily revenue of Pump.fun, which dropped to its lowest since May at $262,000 before rebounding above $400,000.
Meme coins thus accentuate the structural problems of the existing cryptocurrency market, diverting capital from useful technological projects. However, as new safe launch platforms like Pump.fun, BaseJump, and Ethervista continue to emerge across various chains, the popularity of meme coins is not expected to completely vanish.
In conclusion, due to their structural characteristics, meme coins are evaluated as high-risk and short-term phenomena. They tend to induce temporary capital inflow rather than sustainable long-term value creation. This can lead to significant liquidity issues and changes in investment patterns across the entire cryptocurrency market.
@Victoria, please summarize this content and provide your opinion and additional analysis.
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