Financial nihilism fuels meme coin frenzy as traditional finance loses appeal: Binance

Memecoins themselves are not just speculative assets. They have gradually come to represent a symbolic rebellion against established financial norms, aligning themselves with the demographic and ideological changes shaping modern markets, as the latest Binance Research report highlights.

Since 2022, the collective market cap of meme coins, measured as a share of Total 3 (the crypto market excluding BTC, ETH and stablecoins), has almost tripled from 4% to 11 %, driven in part by a sense of financial disillusionment. and the search for alternative investments amid rising inflation.

What drives meme coins?

From 2020 to 2022, the world money supply increased by more than 25%, from $81 trillion to $102 trillion. This rapid increase in the global money supply has led many to seek refuge in assets they perceive to have long-term value to preserve wealth. Real estate is a classic example because it has historically served as a store of value.

However, home ownership has become less attainable, and wages are not keeping pace with rising house prices, a disparity that is particularly difficult for younger generations.

This economic reality has fostered what Binance Research calls “financial nihilism,” as younger investors, hit by affordability crises and unprecedented inflation, become skeptical of traditional financial systems. Their dissatisfaction became evident during events like the 2021 Gamestop, and meme coins today offer a decentralized and disruptive alternative.

Meme coins have managed to create a similar kind of excitement to what the cryptocurrency market generated during the ICO boom of 2017. Their appeal lies in unique accessibility; unlike complex layer 2 solutions or DeFi products, meme coins present a clear and relatable narrative that everyday investors can easily understand.

The simplicity of a meme-driven coin with a “cute or catchy” concept allows potential buyers to connect quickly, reducing “conversion time” compared to more technical altcoins. This accelerated understanding can, in turn, help the narrative spread quickly, building communities and driving speculative interest much faster.

This has been demonstrated by the relatively new token Dogwifhat (WIF), which reached a market cap of $1 billion in just 104 days, while Shiba Inu (SHIB) achieved the same in 279 days, and the coin meme OG Dogecoin (DOGE) took 8. years to reach the milestone.

Additionally, new meme currencies are emerging at a remarkable rate, with over 75% created in the past year alone.

How cabals and influencers inflate the hype of meme coins

Despite their appeal, meme coins are an extremely risky asset class with a high risk of losses, according to Binance Research. Most of the 2023-2024 boom meme coins have been short-lived, with 97% seeing almost zero trading volume. Only a few, such as DOGE and SHIB, have endured, surviving for 10 and 4 years, respectively.

While meme coins have transparency, retail traders remain vulnerable to manipulation by “cabals”, who organize pump and dump schemes, use new addresses to mimic wide distribution, and recruit influencers to create hype artificial

With so many similar meme coins flooding the market, saturation is a risk; projects must focus on unique value and innovation to avoid wasting time and capital.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!