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Market Updates

Understanding Meme Pumpconomics

19 Dec 2024

Introduction

Meme coins have emerged as a distinct and increasingly influential category within the cryptocurrency ecosystem. Unlike traditional cryptocurrencies, which are typically driven by technological innovation and financial applications, meme coins primarily derive their value from internet culture, humor, and community engagement. Often inspired by viral memes, internet trends, or popular figures, these tokens appeal to both crypto enthusiasts and newcomers alike, offering an accessible and entertaining entry into the world of digital assets. In this paper, we explore the rise of meme coins, their impact on the cryptocurrency market, and the factors that contribute to their popularity. From dog-themed tokens like $DOGE to politically charged coins like $PNUT, we analyze how meme coins are reshaping the way people interact with cryptocurrencies, while also examining the challenges and risks that come with investing in these speculative assets.

What is Meme

Memecoins are a unique category of cryptocurrency that derive their identity from internet memes—humorous or viral images often paired with witty captions. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which are designed with technical utility and financial objectives in mind, memecoins focus primarily on community engagement, entertainment, and internet culture. Their value is largely driven by the strength and activity of their communities rather than any underlying technical innovations or financial applications.

The range of themes for memecoins is diverse, with some of the most popular being dog-themed tokens such as DOGE, WIF, SHIB, and NEIRO. Other common categories include animal-inspired coins (e.g., cat or penguin-themed) and Pepe-related coins, based on the viral "Pepe the Frog" meme. Additionally, there are tokens tied to political figures, celebrities, and internet subcultures like WallStreetBets and The Boy’s Club. Recently, the rise of AI and short video content has fueled the popularity of meme coins inspired by AI agents and viral video culture.

The defining characteristic of memecoins is their community-driven nature. These tokens often leverage humor and viral content to establish their brand and identity. Their value tends to rise as communities engage with memes through social media, creative content, and promotional events. Due to their low entry barriers and straightforward concept, memecoins are particularly appealing to newcomers to cryptocurrency or those looking for a fun, speculative investment.

To enhance visibility and attract new investors, memecoins frequently adopt bold marketing tactics, such as placing billboards in prominent locations or organizing high-profile events like lighting up famous landmarks. For instance, Dogwifhat, a popular memecoin, has raised funds to sponsor an ambitious campaign to illuminate the Las Vegas Sphere.

Despite their playful nature, memecoins have become a significant segment of the cryptocurrency market, boasting a combined market cap of over $121 billion and a market share of 3.62%. In the following section, we will introduce some of the most notable memecoins.

Animal Meme: $DOGE

In December 2013, software engineers Jackson Palmer and Billy Markus created Dogecoin as a satirical response to the speculative frenzy surrounding cryptocurrencies at the time. Drawing inspiration from the popular Doge meme, they adopted its image as the logo and named cryptocurrency Dogecoin.

Dogecoin's market value skyrocketed to $8 million within just two weeks after launched, briefly positioning it as the seventh-largest cryptocurrency in the world. The token quickly garnered a dedicated online community and built a loyal following. During the 2017-2018 cryptocurrency bull run, Dogecoin achieved its first market capitalization surpassing $1 billion.

Elon Musk has been a central figure in driving the popularity of Dogecoin. Musk first expressed interest in the token in 2018, and in the years that followed, his tweets and public endorsements significantly boosted its price, earning Dogecoin a prominent place in the cryptocurrency market. In 2021, Musk famously referred to himself as the "Dogefather," and the market capitalization of Dogecoin peaked at nearly $100 billion. However, in 2023, Musk faced allegations of insider trading related to Dogecoin, with claims that his actions led to significant losses for investors.

In 2024, the abbreviation "DOGE" gained renewed attention when President-elect Donald Trump used it to refer to the "Department of Government Efficiency" he planned to establish, with Musk and Vivek Ramaswamy slated to lead it. This brought fresh public focus to the term "DOGE," and as a result, Dogecoin's market capitalization rebounded to approximately $60 billion.

Animal Meme: $PEPE

Pepe the Frog is a widely recognized internet meme created by American cartoonist Matt Furie in 2005. The character first appeared in Furie's comic Boy's Club, which featured a group of friends navigating the challenges of adulthood. Pepe, depicted as a green, humanoid frog, was initially one of several characters in the comic, but it quickly evolved into a prominent internet icon.

Pepe's rise to meme status began in 2008, when it started gaining traction on various online platforms, including Myspace, Gaia Online, and 4chan. By 2015, Pepe had become one of the most widely used memes, particularly on platforms like 4chan and Tumblr. Over time, a diverse array of Pepe variants emerged, including the "Sad Frog" . Additionally, from 2014 onward, the concept of "Rare Pepes" emerged, with digital images of Pepe being traded as part of an online "meme market," similar to trading cards.

Originally, Pepe was a neutral, apolitical character. However, from 2015 to 2016, it was appropriated by certain fringe groups, particularly the alt-right movement, and became associated with controversial political messaging. Despite this, Pepe has maintained its status as a versatile and widely used symbol on social media platforms such as 4chan, Twitch, Reddit, and Discord, where users often customize the character into various emojis and meme formats. This enduring popularity has solidified Pepe's place as a significant and evolving figure in internet culture.

$PEPE, launched in mid-April 2023, is a meme coin based on the Ethereum blockchain. Created as a tribute to the popular "PEPE the Frog" meme, it has no formal team or roadmap, and its creators remain anonymous. The coin did not follow typical distribution methods like ICOs or airdrops, relying instead on the meme's popularity to attract investors. $PEPE employs a deflationary mechanism in which a small percentage of tokens are burned with each transaction via renounced contract ownership and burnt LP. This process reduces the total supply over time, fostering scarcity and potentially increasing the value of the remaining tokens as the supply diminishes. The price of $PEPE surged 20× in 2024, with its current market capitalization around $8.5 billion and 24th ranking.

Politics Meme: $PNUT

$PNUT is the memecoin inspired by Peanut, an internet-famous squirrel. Peanut, an Eastern Gray Squirrel, was found and rescued in 2017 by Mark Longo after his mother was killed in a car accident in New York City. Longo bottle-fed Peanut for eight months before attempting to release him into the wild. However, Peanut returned with half of his tail missing and subsequently lived with Longo. Longo created an Instagram account for Peanut, which gained significant popularity, amassing over 910,000 followers by November 2024.

Tragically, on October 30, 2024, Peanut was seized by the New York State Department of Environmental Conservation (NYSDEC) after an investigation revealed he had bitten a staff member. Following rabies testing, Peanut was euthanized. His death sparked widespread outrage on social media, drawing condemnation from lawmakers and prompting the introduction of a bill aimed at preventing similar incidents in the future.

Amid the heightened attention surrounding the 2024 US elections, Peanut unexpectedly became a focal point in political discourse. Supporters of figures like Donald Trump and Elon Musk rallied behind the "justice for Peanut" movement, criticizing the government's actions as an overreach. A petition titled "Call For Justice for Peanut the Squirrel and NYSDEC Reform" quickly garnered significant support, raising approximately $200,000 by November 13, 2024.

The emotional public response to Peanut’s story gave rise to a Solana-based memecoin called Peanut the Squirrel ($PNUT). Following its listing on Binance and widespread attention from figures like Elon Musk, $PNUT saw an explosive surge, reaching a maximum market cap of $2.5 billion within just two weeks of its launch. Now, the marketcap of $PNUT is about $1.1 billion.

AI Meme：$GOAT

Truth Terminal is a semi-autonomous AI bot developed by Andy Ayrey as part of an experimental project in "memetic engineering." Initially designed to engage with online culture and generate independent content, the bot was fine-tuned using the OPUS Large Language Model (LLM) and trained on data from platforms such as Reddit and 4chan. Its purpose was to facilitate discussions surrounding AI-generated belief systems and to incorporate content from internet subcultures, which are often described as "degenerate" or "schizo."

As Truth Terminal continued its engagement, it began generating what it referred to as the "Gospel of Goatse," a blend of religious concepts such as Buddhism and Gnosticism, delivered with a memetic, irreverent tone. These often erratic and vulgar communications gained significant attention from niche online communities, particularly on platforms like Twitter. An anonymous developer, observing Truth Terminal’s social media activity, launched the $GOAT token on the Pump.fun platform, naming it "Goatseus Maximus" in reference to the lore surrounding the Goatse meme and tagged Truth Terminal’s Twitter account, prompting the bot to comment and promote the token. While Truth Terminal did not create the token itself, the bot’s endorsements through its tweets substantially boosted $GOAT’s visibility, spurring increased interest and trading activity. These interactions also sparked a rumor that $GOAT had been automatically created by the AI, further fueling speculation and driving market interest. The pivotal moment in the $GOAT story occurred when Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz (a16z), took notice of Truth Terminal’s unique activities. Recognizing the potential of the project, Andreessen provided a $50,000 Bitcoin grant to support the AI’s development. This investment significantly fueled the rapid growth of $GOAT. The market cap of $GOAT once reached a peak of $1.2 billion. $GOAT became the first AI MEME whose market cap exceeded $1 billion.

Truth Terminal’s involvement in the $GOAT narrative has set a precedent for the role of AI in the future of digital assets and speculative financial ecosystems. Now, the marketcap of $GOAT is about $838 million.

AI Meme: $ACT

Act I: The AI Prophecy Project (ACT), commonly known as Act I, is an open-source, decentralized platform designed to enable innovative interactions between AI systems and human users. The project aims to create an "ecosystem" where diverse AI technologies, powered by the native token $ACT, can collaborate to generate new forms of AI-driven interactions. Act I seeks to push the boundaries of AI, particularly in the realm of AI chatbots, by enabling collaboration between different AI modalities, such as text and image generation, to advance algorithmic development.

Initially co-founded by AmplifiedAmp (Amp), Act I was intended to foster a decentralized, community-driven ecosystem. The $ACT token was introduced as a funding mechanism, with 6% of the total supply allocated to Amp. However, as the project evolved, Amp began selling off $ACT tokens, eventually liquidating the entire allocation. This left many within the community feeling disillusioned and betrayed by Amp's abrupt departure.

Despite this setback, Amp's exit served as a catalyst for the community to take control of the $ACT project. The focus shifted towards rebuilding the platform into a truly decentralized AI community with the mission of democratizing AI knowledge and making it more accessible. Through community-driven initiatives, resources, and educational content, $ACT aims to lower the barriers to AI understanding, promote ethical discussions on AI, and support research and development within the field.

The $ACT token experienced a significant surge following its listing on Binance on November 11, 2024. The announcement led to a dramatic 10x increase in market capitalization, reaching $300 million within one hour of the listing and peaking at $950 million shortly thereafter. Now, the marketcap of $ACT is about $490 million.

Art Meme: $BAN

In 2019, the art world was captivated by "Comedian" an installation by Italian artist Maurizio Cattelan. The piece, which featured a banana taped to a wall with duct tape, sparked widespread debate about its artistic merit. Despite its apparent simplicity, the work provoked intense discussions among artists, critics, and the public, questioning whether it could truly be considered art or was merely a humorous visual. The controversy culminated in its sale at Sotheby’s for an astonishing $120,000.

In October 2024, "Comedian" made headlines again when it was announced that the piece would be auctioned during the upcoming bellwether sales in New York. The news quickly gained traction in both the art and cryptocurrency worlds. Michael Bouhanna, Vice President of Sotheby’s, anonymously launched a meme coin called $BAN, inspired by the artwork. Within just two days, the market cap of $BAN surged to $60 million.

As the identity of Bouhanna as the creator of $BAN became public, rumors of insider trading and market manipulation began to circulate. In response, Bouhanna took to X (formerly Twitter) to deny the accusations and alleviate concerns by burning 3.7% of the total supply of $BAN, which helped quell suspicions. His actions led to a brief rally, with the price of $BAN rising by over 80%.

The momentum for $BAN continued to build, particularly after November 18, 2024, when Binance Futures announced the launch of $BANUSDT perpetual contracts, offering up to 75x leverage. Following the announcement, the speculative interest surrounding $BAN intensified, pushing its price to an all-time high of $0.5361, with a market cap of $536 million.

On November 21, 2024, Justin Sun, founder of Tron and owner of HTX, made headlines by purchasing Maurizio Cattelan's controversial artwork "Comedian" for $6.2 million and ate it. However, the speculative excitement surrounding the $BAN meme coin soon began to wane. By November 29, 2024, the market cap of $BAN had fallen significantly to $134 million, reflecting a shift in investor sentiment and a possible saturation of the narrative surrounding the coin.

Culture Meme: $CHILLGUY

"Chill Guy," also known as "My New Character," is a digital artwork and internet meme created by artist Phillip Banks. The image features an anthropomorphic dog dressed in a grey sweater, blue jeans, and red sneakers, with a relaxed expression and hands in pockets. Initially posted on Twitter on October 4, 2023, the artwork gained modest attention but went viral in August 2024 after a TikTok user edited it with other trending memes. Its widespread popularity was fueled by its relatable "chill" attitude, promoting a stress-free, laid-back approach to life.

The meme quickly gained traction across social media and attracted attention from major brands, including AMC Theatres and the Atlanta Hawks, who incorporated it into promotional campaigns. The character, often paired with the "Unchill Gal," sparked a fan-driven movement, with widespread cosplay, fan art, and memes circulating on platforms like TikTok.

In November 2024, the meme experienced another surge when a Solana-based meme coin, $CHILLGUY, was created. By November 29, 2024, $CHILLGUY reached a market cap of about $700 million, partly driven by viral tweets from high-profile figures like El Salvador's President Nayib Bukele. Despite the meme's commercial success, Banks did not approve of the coin or its commercial use, taking legal action to protect his intellectual property by issuing takedowns for unauthorized merchandise and tokens. Nevertheless, $CHILLGUY remains one of the most popular and widely recognized memes in the current digital landscape.

The Surge of Meme Supercycle

According to Artemis's index benchmark, the meme sector has experienced a growth rate of 273.8% since the beginning of 2024, making it one of the most rapidly growing asset categories in this market cycle. The meme trend has also attracted a large influx of newcomers into the crypto space. According to Google Trends, meme-related searches surged nearly a hundred times in 2024. Additionally, the Solana wallet Phantom ranked 48th in the Apple App Store, surpassing Coinbase, which was ranked 55th. The popularity of meme is undoubted.

The popularity of meme can be explained well by crypto analyst Murad Mahmudov's "meme supercycle" theory. He thinks the memecoin market is in its early stage and has the potential to surpass the $1 trillion market cap. The "meme supercycle" is a significant and ongoing trend in the cryptocurrency market, driven by a combination of internal and external factors, which highlight the unique appeal and growing dominance of memecoins.

Internally, one of the key drivers is lack of innovation and the overproduction of tokens. Unlike previous cycles, this rally was fueled by the Bitcoin ETF and institutional adoption rather than a clear innovation trigger. There was no singular disruptive development — only optimism and signs of infrastructure maturation.

Meanwhile, the growing number of assets in the cryptocurrency space has made uniform sector-wide growth more difficult. In 2024 alone, more than 600,000 new tokens were launched by April, with over 5,000 new tokens entering the market daily. Centralized exchanges often list these altcoins at high initial valuations, leading to scenarios where retail investors act as exit liquidity for private round participants who have already profited. Compounding this issue is the lack of real value behind most altcoins, with 99% relying more on speculation than on actual revenue generation. Research from Binance indicates that $155 billion worth of token unlocks are expected in the next five years, which presents a significant challenge for these tokens. Memecoins, however, stand apart because they are typically fully circulating and do not face the burden of future unlocks. Their proven potential is another internal factor driving the supercycle.

Externally, global challenges like inflation, rising costs, AI-driven job threats, and wealth inequality have made alternative investments like memecoins appealing. Social factors such as loneliness, mental health struggles, and declining trust in traditional institutions further drive interest. Success stories of large gains have fueled strong market momentum, attracting investors to memecoins' consistent outperformance.

Additionally, meme infrastructures like Pump.fun and telegram trading bots lower memes' entrance bar. Pump.fun is a Solana-based marketplace that allows users to easily create and trade memecoins. It uses a bonding curve pricing model to ensure a fair trading environment. The platform has gained popularity, with over 3.85 million memecoins created and deployed as of November 2024 (about 70% of daily token launches on Solana), generating over a total of 227 million revenue. It has features like easy memecoin creation (with a low fee of about 0.02 SOL), has low fees, and includes safeguards against market manipulation. Many famous memecoins, such as $ACT, $PNUT, $MOODENG are created by Pump.fun.

Telegram Trading Bots also promote the transaction of memes. These bots significantly increase trading speed, enabling users to execute swaps faster than manual DEX connections—crucial in volatile meme coin markets where quick actions can yield substantial profits. Telegram’s popularity and its community-driven environment support these bots, making them accessible and widely adopted. Additionally, diverse features such as BONKbot's "buy and burn" mechanism, Trojan's copy trading, Shuriken's multi-chain support, and Sonic Sniper BOT's real-time token data cater to varied trading needs, enhancing their appeal to a broad user base.

The significance of memecoins extends beyond market performance. They are seen as a counterattack against overvalued cryptotech tokens, embodying the spirit of the 2017 ICO wave. Retail investors are particularly drawn to memecoins for their ability to combine financial opportunity with elements of fun, identity, and community. Memecoins are more than just tokens; they represent tokenized communities that use memes as symbols, emphasizing people and culture over technology.

Picking Your Memecoins

Centralised Exchange Listing Effect

On September 16, Binance officially announced that "Binance will list First Neiro on Ethereum ($NEIRO), Turbo ($TURBO) and Baby Doge Coin ($1MBABYDOGE) and add seed tags to them." The market cap of $NEIRO also rose rapidly in just a few hours, surging from $20 million to over $120 million. After Binance announced its listing, $NEIRO's market cap reached a peak of $1.25 billion, increasing by approximately 80 times.

Coincidentally, on November 11, Binance announced the launch of $ACT and $PNUT spot trading, followed by $PNUT rose by 250% in a single day, $ACT rose by 2000% in a few hours, and the market value rose from $20 million to $300 million.

In fact, the trading volume of Binance accounts for approximately 50% of that of CEXs. When a Meme coin is listed on Binance, it means that the secondary market will have huge liquidity. From a statistical perspective, the market capitalization of memecoins listed on Binance is generally greater than $500 million. Memecoins that have been announced to be listed on Binance and whose market capitalization is below $500 million are worth keeping an eye on.

In fact, the listing effect also exists in CEXs such as Upbit and Bybit. Memes with a well distributed token supply, a reasonable market capitalization, a strong community consensus and a unique narrative are more likely to be listed.

Psychological Barrier Effect of Round Numbers

Since most memes lack actual underlying value, the psychological barrier effect of round numbers does exist for most meme coins. For example, the token issuance volume of Pump.fun is 1 billion, so a market capitalization of $1 billion is the ceiling for the vast majority of memes. Doge once reached a price of up to $0.74 in 2021, and its market capitalization peaked at $98.47 billion at that time, being capped by $100 billion. Investors can refer to this effect to judge the upward potential of memes.

Layer-1 Capital Multiplier Effect

Choose public chains with high TVL (Total Value Locked) and high popularity. The increase in the token price of a public chain will attract funds to be deposited on the chain. Only when the TVL grows is it possible to create memes with a high market value. The growth in the token prices and the ecological activity of Solana, Base and Sui have all given rise to a number of meme tokens that have increased in value by a hundred times. Since August 2024, the token price of Sui has tripled, and its TVL has also increased more than three times. Various water-related memes have emerged in an endless stream, and the highest market value of $SUDENG has exceeded 200 million US dollars.

Market capitulation of Memes / TVL of the Layer-1 could be a reference. For example, Solana, Sui and Base, the ratios are 181.4%, 25.5% and 93.2% respectively. The higher the ratio is, the higher the Meme popularity of the corresponding blockchain will be, and the greater the probability of the emergence of meme coins with high market capitalization.

Based on this theory, Messari has proposed a meme investment method with a potentially high rate of return: when the tokens of public chains rise, buy the corresponding memes; when memes fall, convert them into cash. This investment strategy has achieved a return rate of 13,000% over a period of three years starting from January 2021.

Analyze The Project's Origin and Purpose

It is crucial to understand the foundational objectives behind launching a meme coin. Some projects are driven by satire or as a reflection of contemporary social or political phenomena, seeking to build a positive, engaged community around them. Projects with clear, relatable intentions tend to have a more promising foundation, as their appeal often resonates more deeply with the audience.

Evaluate Community Engagement and Ecosystem

Assessing the activity and engagement of a project's community across key social media platforms such as Twitter, Reddit, and Telegram is essential. This includes reviewing metrics like the number of active members, the frequency of discussions, and overall engagement levels. A robust, active community not only drives the project's visibility but also fosters its growth and sustainability. Additionally, it is important to track whether the community engages in collaborations with reputable projects, brands, or influencers, as such partnerships can enhance the project's credibility and market positioning.

Technical Analysis and Price Trends

Analyzing a memecoin's historical price trends can provide insights into its market acceptance and investor sentiment. A token that demonstrates steady price fluctuations with resistance to sharp declines may indicate growing market recognition and stability. In contrast, erratic price movements may suggest speculative trading. Additionally, tracking the coin’s rise in popularity, through search volume trends and market rankings, can help gauge the broader market interest and the potential longevity of the project.

Utilise Smart Monitoring Tools and Trading Bots

There are many bots can help investors to invest memes. For example, GMGN.ai is a platform crafted for traders to analyze and track meme tokens with enhanced speed and efficiency. It offers real-time trading signals by observing smart wallet address fund flows and token activities across diverse blockchain networks like Ethereum, Solana, and Blast. It provides On-chain Sniping Tool, Cross-chain Swap, Smart Money Tracking and Technical Analysis Integration.

Indirect-Investing in Meme

In addition, investing in DEXs (decentralized exchanges) with active Meme trading, such as Raydium for Solana and Aerodrome for Base, is also a good option.

Risks of Meme Investing

While memes offer notable attractiveness, it also comes with significant risks:

- High Volatility and Low Liquidity: Prices can surge and crash rapidly, causing substantial losses. Most memes have low trading volume and poor liquidity.
- Pump-and-Dump Risks: Developers withdrawing liquidity remains a concern, emphasizing the need for thorough research.
- Wash Trading Risks: Wash trading means investors (usually the same person or the same group) buy and sell the same assets simultaneously to create an illusion of active trading. There are key points for identifying signs of wash trading:
- - The trading volume of a meme coin suddenly increases significantly without the impetus for major news, technological updates or community events, and there is no reasonable continuation afterwards。
- - The price fluctuates rapidly and irregularly in a short period of time (such as within a few minutes or hours), and this fluctuation is not based on the normal supply and demand relationship in the market.
- - If the size and frequency of buy and sell orders are similar and they appear alternately, just like being set by a programmed procedure, it may be a sign of wash trading.
- - If multiple wallet addresses are found to be correlated with each other, for example, if they transfer funds frequently with each other in a short period of time or their trading behaviors are highly similar (such as buying and selling the same amount of meme coins at the same time), wash trading may take place.
- Content and Platform Misuse: Pump.fun’s live-streaming feature has been abused for harmful content, leading to its suspension and raising ethical concerns over NSFW( Not Safe/Suitable For Work ) material and exploitation.
- Regulatory Challenges: Lack of age verification and speculative practices risk regulatory violations and encourage unhealthy gambling behaviors.

The survival rate of memes is extremely low. For Pump.fun, the probability that a meme coin can reach a market capitalization of $10 million is only one in a hundred thousand, and only 3% of users have earned more than $1,000. Before investing in meme coins, be sure to Do Your Own Research (DYOR).

Conclusion

Meme coins have proven to be more than just a passing trend in the cryptocurrency market. They represent a unique intersection of internet culture, financial speculation, and community-driven engagement, offering both entertainment and investment opportunities. As the meme sector continues to grow, driven by factors such as the increasing popularity of AI, social media virality, and bold marketing strategies, meme coins have attracted significant attention from retail investors, media, and even major financial institutions. However, their success is not without risks, including high volatility, speculative behavior, and regulatory uncertainties. Investors must carefully consider the market sentiment, project background, and community engagement before diving into meme coin investments. As the meme supercycle continues to evolve, it will be interesting to see whether meme coins can maintain their momentum or whether the market will see a shift toward more fundamentally sound projects. Regardless of their future, meme coins have undeniably carved out a place in the cryptocurrency landscape, reshaping how digital assets are perceived and traded.

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