Why You Should Exercise Caution with Memecoins (Opinion)

Many Initial Coin Offerings (ICOs) are now based on new memecoin projects that aim to capitalize on the popularity of coins like $PEPE, $SHIBA, or even $DOGE. However, the question arises: Can we truly trust these projects? Is investing in memecoins the best way to profit from cryptocurrencies?

In this article, I'll share my opinion on Vocal Media as we delve into this topic. For more guides and articles on cryptocurrency, feel free to explore Crypto-Neet.fr if you speak French.

Memecoins: Real Value or Mere Folly?

This article was prompted by the recent discovery of the Anarchy token pre-sale, a new memecoin that has managed to raise over 1.4 million US dollars.

The Anarchy project's website appears hastily done, lacking a whitepaper and providing no substantial ideas. Their mission claims to break free from the "matrix" and liberate ourselves from the traditional financial system. However, this mission is already shared by the majority of cryptocurrencies available on the market.

Furthermore, the project fails to disclose information about its team. There is no "Team" section, and Anarchy merely promises to offer a DAO (Decentralized Autonomous Organization) for future decision-making. In summary, there is nothing particularly original about it, and it doesn't offer anything more than other memecoins at the moment.

Does the project truly merit the $1.4 million in funding it has received?

The main risk is that investors will see the share price plummet some time after its release. Perhaps profits can be made in the first few hours. We're talking here only about speculation and no contribution to the world of cryptocurrencies or blockchain.

In comparison with $PEPE, is it really dangerous to invest in a new memecoin? Let's take a look at the risks you can run with such an investment.

The Main Risk: Market Manipulation

By examining other memecoins released this year, we can clearly see the dangers involved. Several news sites published sponsored articles on $SPONGE, a memecoin dedicated to SpongeBob SquarePants.

The problem with $SPONGE is that its price initially skyrocketed upon release but subsequently experienced a violent collapse.

In the chart below, you can observe the price of $SPONGE soaring in the first three days, reaching an all-time high (ATH) of $0.0019 before plummeting. A month later, its price had fallen by -93.16%. Presently, the token trades at $0.00013, with an estimated market cap of $3.3 million.

Taking a longer-term example, we have $FLOKI, which gained prominence during the last bull run. While its ATH was around $0.0003, its price is now ten times lower. Over time, the price has significantly decreased.

In contrast, $PEPE emerged as one of the top memecoins in terms of market capitalization. Its share price surged significantly upon release but has since stabilized somewhat lower. However, the future remains uncertain.

The roadmap shared on Pepe's website is weak and primarily revolves around merchandise. It's another project that offers limited substance, unlike Shiba Inu, which strives to provide more interesting services.

If $PEPE succeeded, can the same be said for others?

While $PEPE found success, many memecoin projects have failed, resulting in substantial losses for investors. Unless you're extremely lucky, the memecoin market's volatility and instability make it a risky venture.

The Average Investor Seeking Quick Profits

Cryptocurrencies have gained a reputation for rapid wealth accumulation. However, this idea is often overhyped and disseminated widely among the general public.

Many individuals believe it's easy to double their money by investing solely in coins like $PEPE, $DOGE, or $SPONGE because of their sudden popularity. This misconception leads many newcomers to lose money by primarily investing in memecoins.

The world of cryptocurrencies and blockchain is exciting. I encourage you to explore the entire ecosystem and implement a smart investment strategy. While memecoins can play a part, only allocate a small portion of your capital to them. High volatility and low long-term prospects pose risks to your funds. Think twice before investing a single cent in a memecoin.

Especially when it comes to the latest ICOs, where projects often lack clear objectives.

Investing in these types of projects entails significant risks. It is wiser to build a solid foundation for your portfolio and aim for substantial profits in the next bull run. However, patience is key, and the word "HODL" holds true as we await the next all-time high (ATH).