Key Takeaways
A recent report by Binance Research paints a stark picture of the fleeting nature of memecoins, with a staggering 97% of these digital tokens losing their value entirely.
The main culprit? Overreliance on market sentiment and speculation.
The memecoin craze, which peaked in 2023 and 2024, has since crashed, leaving behind a trail of worthless digital tokens.
According to Binance researcher Joshua Wong, only 3% of memecoins have managed to survive, with most trading at near-zero volumes.
Popular tokens like Dogecoin (DOGE) and Shiba Inu (SHIB), which have defied the odds, are exceptions that prove the rule.
“The rapid rate of growth and speculation makes memecoins an investment vehicle with high potential for outsized returns, but their heavy reliance on market sentiment, with little else to back them in the way of fundamental valuations, also makes them an extremely risky asset class with high risk of losses,” Wong said.
Binance said that while memecoins can serve as an introduction to blockchain technology and cryptocurrency investing, they are not without their pitfalls, requiring a measured and informed approach.
Another significant issue plaguing the memecoin space is the rise of pump and dump schemes.
These groups, often referred to as “cabals,” manipulate prices by creating artificial hype and then dumping their tokens on unsuspecting retail investors.
The transparency of blockchain technology is of little help in identifying the individuals behind these schemes.
Furthermore, these groups may pay influencers to promote certain tokens, artificially generating hype on social media and creating a false impression of organic growth and interest.
Binance Research suggests that while memecoins are likely to keep growing in popularity, their impact on the broader digital asset space may be mixed.
Memecoins have highlighted the value of fair launches and community engagement, setting an example for other crypto projects.
However, their intense focus—often lacking technological substance—may divert resources from more significant blockchain advancements.
Binance Research encourages balancing speculative interest in memecoins with a focus on developing impactful, tech-driven blockchain applications.
While speculative, memecoins are an influential part of the cryptocurrency landscape.
As blockchain evolves, researchers envision both memecoins and advanced projects coexisting, each appealing to different market segments.
“Memecoins demonstrate blockchain’s power to unite global communities and inspire movements around shared digital assets,” Wong concluded.