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Over the past weekend, memecoin prices rose noticeably, driven by increased social buzz and an increased appetite for risk among crypto investors. The concept of a “memecoin supercycle,” which posits that memecoins will lead the next cryptocurrency bull run, has gained traction on X. Against this backdrop, crypto analyst Kai (@Kaiwen0x) published a widely shared article explaining the current appeal of memecoins as a viable investment choice.
The arguments in favor of Memecoins in the Crypto Bull Run 2025
Kai claims that memecoins are poised to outperform the market by 2025, suggesting that owning a “basket of memecoins” could allow investors to outperform 99% of market participants. “Aside from Bitcoin and stablecoins, memecoin is the only category that has found a clear product-market fit. They combine the best features of an ICO (capital formation) and an NFT (community creation) to offer a killer product: global, permissionless speculation,” he says.
The analyst points out that traditional crypto projects often juggle product development and token management, while memecoins focus solely on the token itself. “Memecoins removed the product and made the token its entire business, with the value of the token coming from the attention generated by its community,” explains Kai. Citing data from crypto analyst @MustStopMurad, Kai notes that in 2024, 16 of the top 20 tokens in the top 300 that outperformed Bitcoin were memecoins.
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Kai identifies two main external factors that are crucial for a memecoin surge. First, macro liquidity and interest rates must be favorable for the overall market: “The macro setup points to higher liquidity and lower interest rates over the next 12 months. Memecoins act as a leveraged beta to Bitcoin, allowing you to capture maximum potential in a risk environment,” explains Kai.
Second, the analyst is referring to financial nihilism, a term popularized by Travis Kling (@Travis_Kling), CEO of Ikigai Investment. This theory suggests that the rise of financial nihilism and the “YOLO” mentality are attracting more participants to speculative markets.
Internally, memecoins have shown to possess clear product-market fit and benefit from the so-called Lindy effect, where the future life expectancy of certain technologies or ideas is proportional to their current age, which suggests that memecoins are here to stay. Additionally, memecoins are particularly good at creating and maintaining compelling narratives, an essential aspect in a market dominated by speculation and investor sentiment.
The Art of Memecoin Selection
Kai delves into the strategies for selecting promising memecoins, emphasizing the importance of nuanced analysis:
Emotional Resonance: “I look for memes that generate a strong emotional response. Is it funny, relevant, catchy, powerful or memorable? The average retail investor will be the last marginal bidder for our magic internet coins, so you need to buy and hold what they emotionally resonate with,” says Kai.
- Simplicity of tickers: favor simple and powerful tickers, ideally 3 to 5 letters, such as WIF, GIGA and BULL.
- Incumbency Growth: Monitor consistent growth in registrants as an indicator of increasing adoption.
- Wide distribution of tokens: favor coins with wide distribution to avoid the risks of centralization.
- Withdrawal Resilience: Identifying coins that have survived multiple significant price drops and rebounded, indicating strong community support.
- Active Community Engagement: Looking for an “active army of answers that get engagements on X,” which signals a vibrant and engaged community.
- Exchange Listings: It should be noted that centralized exchange (CEX) listing announcements can have a significant impact on a token’s valuation.
- Absence of insiders: Be wary of plays involving insider involvement, such as pre-sales or venture capital backing, which can lead to an uneven playing field.
Potential risks and invalidation scenarios
Kai acknowledges the risks associated with investing in memecoins:
- Macro Regime Shift: A significant rebound in inflation or reversal of monetary easing could invalidate the macro thesis of a long position in risk assets.
- Idiosyncratic Events: Events such as major exchange hacks, regulatory changes, or significant market crashes could disproportionately affect memecoins.
- US election results: “Counterintuitively, memecoins could underperform this cycle if Trump wins the election,” Kai speculates.
- Emotional attachment: It warns against investing too much emotionally in a particular community, as it can cloud judgment. “Identity can create emotional ties that cloud your judgment as an investor. »
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Kai highlights the importance of understanding investor psychology in the crypto market. “Ultimately, the question comes down to: “What does the average crypto investor actually care about?” »It’s not the technology. It’s not the product. It is the symbol – embodying greed and the expectation of greater profit – that ultimately consumes this investor,” he writes.
However, the crypto analyst advises investors to remain vigilant and adaptable: “To avoid going broke, we need to monitor macroeconomic conditions for any signs of a regime change. We also need to keep an eye out for idiosyncratic events that could invalidate the thesis of investing in a specific token. Kai concludes: “Good luck, and for the love of dogs, don’t curve this opportunity (again) 100x.”
At press time, WIF was trading at $2.67.
Featured image from iStock, chart from TradingView.com
