Why meme coins are trending again

By Anushree Dave

Wall Street Baby was up 500% on Monday, but is down 74% on Tuesday afternoon

Over the weekend, a meme coin called Pepe Coin rallied over 200%. On Monday, another meme coin called Wall Street Baby surged over 300% in price after a tweet from popular meme stocks account Wall Street Bets, which boasts over half a million followers on Twitter. But on Tuesday that coin was down 74% according to CoinMarketCap.

Seeing these coins surge recently has raised questions for some about whether the meme stock craze that we witnessed in 2021 was going to make a comeback in the crypto market.

In 2021, buying of so-called meme coins was sparked by talk on social media site Reddit and resulted in both serious gains and losses for retail investors.

Other meme coins have also experienced significant gains in value, such as POOH with a 1077.91% increase in just 24 hours and a volume of $10 million, and WOJAK with a 160.52% increase and a volume of $102 million in the past 24 hours, according to blockchain analyst Sara Gherghelas at DappRadar. "It is interesting to note that in recent months, there has been a growing trend in memes, even within the NFT ecosystem," she said.

Does this mean that meme coins are possibly making a come back? It's hard to tell.

"Possibly they are, but by their very definition it's impossible to predict their price movements as there are virtually no fundamentals to track," said James Butterfill, head of research at CoinShares, digital asset investment and trading group.

"A bull market in any asset will lead to some investors engaging in less due diligence. No doubt there is an element of correlation to broader crypto prices and perhaps an investment strategy based around trawling reddit to gauge sentiment may help, but this is limited to a select set of opportunist retail investors."

The price of Bitcoin has risen recently after the collapse of several regional U.S. banks, including Silicon Valley Bank and crypto-friendly Signature Bank in March. Last month, Bitcoin hit $30,000 for the first time in 10-months. Butterfield thinks some of that enthusiasm for crypto tokens has included meme coins as well.

There's also the possibility that making money off of bitcoin's recent price increase has led to investing in more higher-risk assets in hopes of a greater return, said Kyle Doane, trader at Arca. "Liquidity remains depressed, increasing the likelihood of large, sharp price movements," he said. "These types of fast money traders seem to have a short memory from the losses of last year and YTD some of the large meme coin moves have held up and haven't had that disastrous correction yet this year. Traders will continue to take shots until this strategy stops working."

Butterfield said the bull run for bitcoin has rubbed off on some memecoins, but that he's "not sure there has been conscious decision making amongst speculators in meme coins in relation to the banking sector woes."

Meme coins like ShibaINU, which started as a joke, have grown large enough to have their own decentralized exchange, a collection of non-fungible tokens, and future plans to launch a stablecoin, said DappRadar's Gherghelas, pointing out that while some meme coins may experience short-lived hype, others turn into more serious projects.

-Anushree Dave

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05-02-23 1520ET

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