- Memecoins reach 2.58% crypto market cap.
- Venture capitalists are becoming interested.
- Despite this, only a small fraction of memecoins succeed.
Memecoins have long been seen as a joke investment, mostly attracting retail investors. Despite this, the sector has seen unprecedented growth. The potential for high returns, despite the risks, is now attracting even venture capitalists.
Sponsored
In recent years, memecoins have grown significantly as a percentage of the total crypto market cap. At the same time, their liquidity is almost double that of the decentralized finance (DeFi) sector. This has prompted research into just how high they can go.ย
Memecoin Marketโs Rapid Rise
Memecoins are starting to become serious business. According to a recent report by ArkStream Capital, memecoins significantly increased their market cap and liquidity. For one, memecoins now make up a 2.58% share of the overall crypto market cap. This is a significant increase from the 0.87% in 2022.
At the same time, memecoin liquidity is more than double that of DeFi. The daily turnover rate is at 11%, twice as high as DeFiโs 5% and Layer 1โs 4%. These high volumes suggest high user engagement, meaning users constantly buy and sell tokens.ย
This high engagement also boosted venture capital interest despite the inherent risks. Notably, the potential for significant returns is balanced out with the inherent volatility of memecoins. In particular, the report points out that only 2% of memecoins attain success.ย
How Big Can Memecoins Get?
While most memecoins fail, the sector continues to grow. This prompted ArkStream Capital to try to predict how high they could go. The analytics firm suggested that the memecoin market cap share could reach 3.54% by 2025 and 7.81% by 2030.ย
It is worth pointing out that these models are based on linear regression, which is not a reliable tool for prediction. In particular, linear regression models assume that trends will continue at the same rate, which is never the case.
Memecoins are bound to reach maturity when their crypto market share stabilizes. It is impossible to know when this will happen, but memecoin traders certainly think the trends will continue.ย
On the Flipside
Solana memecoin launchpad, Pump.fun has made it easier than ever to launch tokens. This has lowered the barriers to entry and brought an explosion of new tokens.
Memecoin traders highlight the community aspect of trading. Traders are not just looking for profit but also for fun, engagement, and connection with others. This could explain a part of the memecoin appeal.ย
Why This Matters
Memecoins offer both opportunities and risks, which is why venture capital is starting to take note. Its community aspect also makes it an asset class with a unique appeal to retail investors.
Read more about memecoins:
Wiz Khalifaโs Memecoin Flash Crashes Post Launch: A Hack or Scam?
Read more about crypto clicker apps:
Is Hamster Kombat Hype Over? Token Sinks as Users Abandon Game
