2024 has undoubtedly been the year of meme coins in the cryptocurrency sector. More than 75% of all such tokens were launched in the last year alone, a recent report from Binance Research revealed.
However, the study titled Understanding the Rise of Memecoins reveals that the vast majority of these meme coins (97%) quickly fell into oblivion, with trading volumes close to zero.
The report explores the reason behind the explosion of meme coins in 2024, exploring the allure of danger and the lure of profits that these tokens can offer. These digital assets come and go quickly, capturing the attention of investors attracted by the possibility of high returns in short periods.
Meme coins win over investors with simplicity and cultural appeal
According to a report from Binance Research, meme coins have gained popularity among retail investors because they are simple and accessible. They appeal to those who may be intimidated by the technical complexity of more traditional blockchain projects.
These cryptocurrencies are “a new type of internet-native asset, aligned with internet culture and completely decoupled from the traditional financial system.”
Meme coins stand out for their ease of understanding and their ability to mobilize communities around cultural narratives, making them attractive to investors looking for high-risk opportunities but with high returns.
This simplicity and narrative-driven appeal has fueled the rapid growth of meme coins. For example, Dogwifhat (WIF) reached a market cap of $1 billion in just 104 days. This was significantly shorter than the eight years it took for pioneer Dogecoin (DOGE) to reach the same milestone.
The report also points to a combination of macroeconomic factors and social sentiments behind the rising popularity of meme coins.
With inflation and economic uncertainty, a sense of “financial nihilism” is emerging among younger generations, many of whom are turning to high-risk investments in the hope of quick gains.
“It’s hard to blame people for wanting to get rich quick when they’ve lost faith in the possibility of getting rich slowly,” the report notes, quoting Andrew Edgecliffe-Johnson in a 2022 Financial Times article on the topic.
Additionally, meme coins aim to offer fair launches and equal investment opportunities for everyone.
“Anyone with an Ethereum wallet was able to buy the newest popular altcoin at the same time as everyone else in the market,” the report emphasizes.
97% of the meme coins launched in the last year are practically no longer traded
The meme coin craze, despite the record number of launches over the past year, faces a serious problem: its survival rate is extremely low. According to Binance research, 97% of the meme coins launched in the last twelve months have seen their trading volumes reduced to almost zero, making them practically obsolete.
The rapid creation of these tokens, followed by a sharp decline, often comes from the limited utility they offer. Without tangible applications or robust underlying technologies, meme coins rely solely on market sentiment.
This makes them particularly susceptible to price swings and pump-and-dump schemes. These are market manipulations where groups inflate prices and then quickly sell their holdings, exploiting retail investors as “exit liquidity.”
