Memecoins have been an integral part of the cryptocurrency space since Dogecoin’s inception in 2013, with fortunes made and ruined in equal measure. But a new token on the block has caused quite a stir in recent weeks as Pepe (PEPE) wrests a piece of the memecoin market share from plucky investors.
As Cointelegraph previously reported, PEPE experienced a 2,000% boom in value upon its launch in late April 2023. The token’s rally is largely attributed to enthusiasm for the memecoin, with the project widely shared on Twitter over the past month.
Today. $PEPE #MMGA pic.twitter.com/Adf0Vem8B3
—Pepe (@pepecoineth) April 14, 2023
Pepe’s own website includes a disclaimer calling PEPE a “memecoin with no intrinsic value or expectations of financial return.” The project also stipulates that it has no formal team or roadmap and that the token is “completely useless and for entertainment purposes only.”
Data analytics firm Nansen provided insightful data and key takeaways following PEPE’s market capitalization increase. Research analyst Xin Yi estimated the total value of the memecoin market to be around $20 billion, with the top five tokens Dogecoin (DOGE), Shiba Inu (SHIB), PEPE, Baby Doge Coin (BABYDOGE) and Floki (FLOKI), represent more than $18 billion in value.
Data provided by Nansen Query shows the huge increase in PEPE’s token value and market capitalization relative to the other five popular memecoins. Yi also points out that the infographic does not give a complete picture, as PEPE’s data reflects its listing on CoinGecko, which occurred a couple of weeks after it was created.
Yi told Cointelegraph that the social aspect of memecoins continues to be a major driver of investor sentiment and action, highlighting Elon Musk’s infamous Dogecoin ads and rampant Twitter bots bringing memecoin hashtags to prominence on the Internet. Twitter:
“Since memecoins have no intrinsic value, it depends on catalysts like social relevance and also events like 420, which is known as DOGE day, can affect token prices as well.”
As explained above, Nansen provides data analysis and insights into “smart money” cryptocurrency traders and holders by tagging portfolios and tracking trades. The PEPE boom has also attracted a significant number of smart money holders, according to on-chain data highlighted by Yi. He added that a few thousand traders could benefit from the rise in value of memecoins, which is a long shot given that many other memecoins are pump and dump or rug-pulling schemes:
“However, the gains from a good coin can easily exceed the cost of the other ‘failed’ coins, which is probably why these memecoins are still attractive to most investors. So it really depends on the investor risk appetite.
However, Yi also noted that the inherent risk of memecoins often leads to liquidity crises, in which holders with large amounts of tokens sell off their stakes, leaving smaller investors reeling from losses.
Several cryptocurrency exchanges listed PEPE following its launch and its appeal to investors, including OKX, MEXC Global, Bitget, Gate.io, and Huobi.
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