The meme leader is back and so are meme coins.
The market was all-in on memes on Monday, and that helped the value of tokens like Dogecoin (DOGE 6.20%) and Pepe (PEPE 13.88%), which hold little value but the meme itself. The biggest catalyst wasn’t any news from Wall Street, but rather the return of a popular Reddit personality named Roaring Kitty, who brought on the stock market meme craze in the first place.
Over the past 24 hours, Dogecoin was a big mover, up 5.1% as of 3 p.m. ET today. Pepe was up 14.3%, dogwifhat jumped 3%, and Bonk (CRYPTO: BONK) gained 3.1%. All of this happened while most of the crypto market was down.
The meme lives
Memes, or a culturally relevant images or concepts that spread wildly on the internet, have taken over the market today after a single tweet from Roaring Kitty after three years of being dormant. Shares of stocks like GameStop, AMC, and Hertz skyrocketed with no news other than the tweet.
What makes this kind of market reaction so impactful is the speed with which it spreads. By the time the stock market opened today, it was clear that everyone knew about Roaring Kitty’s presence because every media outlet had written about it.
In the crypto market, the meme trend of 2021 never died and has arguably gained momentum over the last three years. So it’s natural that meme coins were some of the biggest movers today.
When will the meme end?
The biggest question for investors is how long the move will last. Dogecoin was the big winner in early 2021 but lost more than 90% of its value from the 2021 peak to the end of 2022.
Dogecoin price data by YCharts.
The same could be said for the meme stocks that bounced and then lost their gains.
The problem with meme investments is that the meme will only last for so long because there aren’t fundamentals driving the move. Token prices like this are driven by the price the next buyer will pay, and if the meme loses momentum, that price can drop.
The better investment in a meme market
It might not be as exciting, but I think the better buys in this crypto market are the assets that are building technological improvement on the blockchain. Tokens like Ethereum and Solana that provide the currency for blockchains with businesses built on top of them and efficient ways to make financial transactions are emerging as well.
Meme coins have not proved they have the ability to build that kind of financial or developer ecosystem to be used as a medium of exchange for financial transactions, so they likely won’t turn a meme into fundamental disruption.
I also think the relatively weak economic indicators like higher inflation and interest rates and a weakening job market could make for a tough market for purely speculative assets in the future.
A few years ago, stimulus checks drove rampant speculation in crypto and meme coins, but when the checks stopped, the tokens fell. I think a similar crash will happen again; we just don’t know when.
Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.