Meme Coins: The Wild Corner of the Crypto Market

The world of cryptocurrency has always been a wild and unpredictable place, but lately, it seems that the wild corner – known as meme coins – has taken center stage. With President Donald Trump's support for cryptocurrencies sparking renewed interest in digital currencies, the market is abuzz with excitement. And at the heart of this phenomenon are meme coins, generally based on internet jokes, fads, or characters, with often fun logos.

One of the best-known meme coins is dogecoin, a Shiba Inu dog-themed coin that Trump's close ally Elon Musk has long hyped. Dogecoin surged soon after the election – but is down about 40% over the past month. Other popular meme coins include $Trump, launched by Trump himself; $Hawk, launched by viral internet personality Haliey Welch; and $Libra, a coin that led to a political scandal in Argentina after it was promoted on social media by President Javier Milei.

The Volatility of Meme Coins

Meme coins are usually very volatile and can experience rapid price swings. Coins generally start with prices of one cent or less, meaning percentage changes can be significant. They are also sometimes linked to scammers and "rug pulls," when promoters attract buyers and then stop trading before the coin crashes, allowing them to pocket some of the proceeds.

Nicolai Sondergaard, research analyst at multichain analytics platform Nansen, told Business Insider that meme coins were not inherently risky investments. "What makes them dangerous, however, is the people launching them with nefarious intentions and not playing fair," he said. "This is how we end up seeing the many issues of tokens being launched, quickly rising several hundred if not thousands of per cent, only to quickly dump on the majority."

The SEC's Take on Meme Coins

Before his inauguration, Trump and first lady Melania Trump launched their own meme coins – $Trump and $Melania. "My new Official Trump Meme is here! It's time to celebrate everything we stand for: Winning!" the president said on X on January 18.

The Securities and Exchange Commission said on Thursday that most meme coins do not qualify as securities. "Meme coins typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation. In this regard, meme coins are akin to collectibles," it said in a statement.

Why Do People Buy Meme Coins?

Ying-Ying Hsieh, assistant professor and associate director of the Center for Cryptocurrency Research and Engineering at Imperial College London, said people buy meme coins for one reason: the hope of quick wealth. "Meme coins were introduced as a 'get rich quick' scheme on the back of crypto enthusiasm," she explained.

"However, after several scams and cases of fraud in regards to highly inflated coins, the general public grew aware of a pattern that showed a sudden spike in value in most meme coins," Hsieh said. "Instead of giving up on meme coins, individuals, fully aware of their risk, decided to buy these coins with a very opportunistic mindset, hoping to sell the coin just before it came crashing down."

The Impact of Trump's Crypto-Friendly Pledges

Trump's crypto-friendly pledges during his campaign, branding himself as the crypto candidate, helped to boost bitcoin to new highs. The best-known cryptocurrency surged through the $100,000 threshold for the first time in December when the then-president-elect nominated Bush-era Securities and Exchange Commission boss Paul Atkins to run the regulator once again.

However, bitcoin has been on the slide in recent weeks, declining more than 20% from January's record price of just over $109,000 to under $84,000 on Wednesday. Factors including fears about tariffs, inflation, and high interest rates have been blamed for denting crypto optimism this year.

Conclusion

The world of cryptocurrency is always a wild and unpredictable place, but the emergence of meme coins has taken center stage in recent months. While some see them as a way to make quick profits, others are more cautious about their risks. One thing is certain: the crypto market will continue to be shaped by the actions of individuals and institutions alike.