Memecoin Mania

Originally a thread on X/Twitter:

Memecoin trading is back with marketcaps for select coins exploding by 5X, 10X and sometimes even 100X+.

Over the past few days I talked to traders who hold anywhere from $500 to $20MM+ of memecoins.

Their views are eye opening!

IT’S A GAME

The concept that “It’s a game” came up frequently so I described the game to get reactions. My framing:

The game starts with a piece of paper with a line drawn down the middle. On the left would be names and on the right would be numbers associated with each name.

Your goal is to convince people that being on the list is cool even though the main way anyone knows you’re on it is for you tell them.

Being on the list means that you’re expected to tweet funny pictures or charts to generate FOMO for the game.

Your number matters because you get to sell players as much or as little of your number as you’d like with prices fluctuating based on supply and demand.

Your position on the scoreboard is based on how much you eventually sell your numbers for.

The responses are telling:

Direct Quote: “How is this any different than the stock market? Nobody knows what’s going on at companies anyway. One day they say they’re doing well and the next day they’re out of business. At least I understand this game.”

Direct Quote: “It’s a damn fun game once you’re in it. You get to act like an idiot, annoy everyone around you and make silly money doing it. If it doesn’t work out then you try again. I know it doesn’t make any sense but it feels great when my money is doubling every day.”

IT’S A MOVEMENT

Nobody I talked to believed they were investing in a “thing of value”. They believed that tokens would go up in value if more people were onboarded.

I asked if this described a Ponzi scheme and the most common response was: “Memecoins are a movement.”

I explained that social movements are loosely coordinated interactions between individuals or groups engaged in a political or cultural conflict on the basis of a shared collective identity.

I asked what the “shared values” were and the responses were scattered and scrambled.

Direct Quote: “This is the next generation of Doge or Shiba. It’s the same movement. I can’t exactly explain what it’s all about except not believing in the way things are. So we buy funny coins and get to share memes on Twitter and feel better about ourselves.”

I WANT ACTION

It was obvious that every person I talked to was looking for quick gains. They wanted the dopamine jolt that comes with quick 50-100% movements. The volatility and the potential to 10X+ their money or lose it all quickly was a feature, not a flaw.

Direct Quote: “Saving money is just plain stupid because life is getting more expensive faster than I can save. I might as well gamble and hopefully 10X whatever I have. If I lose it I’m no worse off than if I pissed it away somewhere else.”

MORE IS BETTER

One common belief that came up a lot was that “more is better”. Almost every person I talked to knew how many people were holding the tokens they were involved with and compared it to the number of people holding Doge and Shiba.

The “why” that I heard was that more people = more demand = a higher price.

I asked: “If it’s a movement, why would you increase the cost as more people join? Buying all the memberships and selling them for a profit later seems disingenuous.”

The answers made no sense.

Direct Quote: “Memes are fun. Making money is fun. I think traders call it a movement because it makes simps feel like they’re still early. If people think that tweeting memes makes them part of a movement and can make them rich then all I care about is buying before they do.”

IS WAGMI BACK?

What amazed me was that the small traders and the big traders thought very differently about the possibility of collectively winning.

The “We’re All Going to Make It” ethos was embraced by small traders and laughed at by the whales.

The small traders were happy there was something everyone could get behind, drive the market cap up, and ultimately create wealth.

The big traders understood that the goal was to get behind a token long enough to drive demand and then use FOMO to create their exit liquidity.

The small traders only kind-of-sort-of understood who loses if they win.

The big traders have well-formed views about where demand comes from, when it will come, and who’s going to be left holding the bag in the end.

Direct Quote: “If you don’t know where your exit liquidity is going to come from then you’re someone else’s exit liquidity. Nobody wants to hold these s—t coins forever. If you want a nice car you have to get good at hyping people up while you’re dumping.”

NFTS AREN’T FUN ANYMORE

This was one of the clearest themes that people were passionate about.

There was a common belief that people started trading NFTs because they were fun and had the potential to create real wealth.

But most of the people I talked to were fed up with project Founders and Communities.

Founders overpromised and underdelivered and rug pulls were destroying the space.

Community members were angry when floors were down and created FUD on the way out to chase the next hot thing.

The lack of liquidity meant they couldn’t manage their investments well and had to sell when everyone else was buying.

But communities were constantly sell shaming which pissed them off given almost everyone was in it for the money.

The general view: NFTs aren’t fun anymore.

Direct Quote: “I can buy and sell $PEPE without worrying about other people’s feelings. There’s enough liquidity to sell when I want to and as long as I don’t create FUD people leave me alone. If I want to Tweet I do and if I don’t then nobody cares.”

My takeaway is that we all should digest what’s going on in the crypto space. People seem to prefer memecoins to “projects” which is counterintuitive to investors like me.

I’m curious about the community’s thoughts so feel free to like, share and comment!