Internet culture has long been synonymous with memes. However, 2021 has seen the emergence of meme investing across both Wall Street and the world of cryptocurrency. Today, two meme coins are present in the top 10 coins by market capitalization, and with ever-improving communication between investors, we may see meme investing explode further in 2022.
Meme coins are nothing new in the world of cryptocurrency. The world-famous Dogecoin (DOGE) was created in 2013 as a joke based on the popular Shiba-themed meme of the time. Software engineers Billy Markus and Jackson Palmeras released the coin as an entertaining way of entering the world of crypto. However, it wasn’t until 2021 that DOGE, backed by Elon Musk, really took off.
As data shows, Dogecoin’s 2021 rally has been emphatic. Since the start of the year, the value of DOGE has risen by over 14,000%, before shedding more than 60% of its value. During this time, the meme coin won a range of celebrity backers including Snoop Dogg, Gene Simmons and, significantly, Elon Musk, who underlined his enthusiasm for the project by declaring that he would send DOGE into space.
However, in recent weeks, DOGE has been overtaken by another meme coin, called SHIBA INU, which at the time of writing has a market capitalization of a little over $1 billion more than DOGE.
So, what’s driving the rise of the memes? And what will drive investor momentum further towards meme coins in 2022? Let’s take a deeper look at the crypto meme investing phenomenon:
Why has meme investing become so popular?
Firstly, let’s take a look at what actually defines a meme coin. Traditional cryptocurrencies are generally created as a means of solving real-world problems and to carry a degree of utility for users, whether that utility is privacy, borderless transactions, or acting as a native currency to DeFi projects.
Meme coins, however, are created with no such utility, and with no intention for any practicality whatsoever. They simply exist as a cryptocurrency that’s attached to a meme.
So with this in mind, why are investors flocking to buy into assets that have no fundamentals? It’s likely that investors have finally discovered the power of community when investing in assets.
It’s perhaps no surprise that Dogecoin experienced a surge of 500% in the hours that followed January’s GameStop short squeeze on Wall Street. In the case of GameStop, a collection of Reddit-based investors collaborated to pump the stock of the nostalgia-driven U.S. computer game store to send its price soaring some 4,000%.
The group that sparked the GameStop short squeeze, r/WallStreetBets, suddenly spawned a cryptocurrency doppelganger in r/SatoshiBets - focused on sharing community-driven investing ideas and inspiring large volumes of social investors to pump the price of underappreciated assets. Meme coins suddenly found an active and extremely social new market.
Although meme coins were created without much functionality, this isn’t to say that they don’t possess the potential to outperform the likes of Bitcoin and Ethereum in certain ways. Notably, the circulating supply of coins like SHIB and DOGE, at over 500 trillion and 100 billion respectively means that they could become more practical for daily payments due to their sheer lack of scarcity compared to BTC’s far more limited capped supply of 21 million coins, for instance.
Who let the dogs out?
One recurring trend around popular meme investing is the presence of dogs. Today’s most dominant memes by market capitalization are SHIBA INU (SHIB) and Dogecoin (DOGE), both of which have outpaced popular altcoins like Litecoin, Chainlink and Uniswap to name a few.
Notably, SHIB has enjoyed a barnstorming start to Q4 2021. The cryptocurrency has risen 777% in the span of a month. The surge also positively impacted Dogecoin, which enjoyed a 30% rally as its meme-based sibling achieved significant gains.
The theme of dogs within meme coins appears to be a lure for investors, and leading cryptocurrency exchanges have begun to recognize this. They seem to be working to ensure that the likes of SHIB and DOGE are advertised prominently on marketing campaigns and within app stores.
Cryptocurrency exchange Coinbase topped the Apple charts for the most downloaded free app in late October, and, significantly, the app included a reference to SHIB within its name as a draw for investors.
The rise of social exchanges
2022 promises to be a massive year for cryptocurrency investing, and as rates of adoption and retail investor volumes continue to grow, we’re likely to see lots more meme investing taking place.
It’s also likely that we’ll see emerging technology make social investing, a key facet in the mass purchase of meme-based assets, far more prominent in the coming months and years.
One such example of this can be found in the upcoming arrival of KuCoin S, which the cryptocurrency investing platform’s creators have heralded as a “special space for invited KuCoin users to experience the brand new social features prior to the official launch of the KuCoin App.”
KuCoin S is an example of an exchange that’s set to integrate far greater levels of education and social engagement within its platform to help investors meet other individuals who share the same ambitions and visions for the market. Also, investors can access news feeds from trusted crypto media and top-performing portfolios from other traders. Copying others’ successful trades is also made possible on the platform, making trading much easier than before.
KuCoin’s vision for a more socially engaged investing experience may represent a logical step forward for the cryptocurrency landscape, which is a vastly communal experience. The sharing of educational tools, as well as informed thoughts of respected figures across the world of cryptocurrency investing, could pave the way for smarter purchases and buying decisions for countless investors.
In a future that’s increasingly built on shared experiences and social sentiment, we’re likely to see meme investing become more of a dominant force in 2022, proving that a joke taken too far can sometimes be a profitable thing in the world of cryptocurrency.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dmytro Spilka
Dmytro is a finance writer based in London. His work has been published in The Financial Express, The Diplomat, IBM, Investing.com, FXEmpire, Investment Week and FXStreet.
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