It was all a meme

If you have been following my posts on crypto, you probably have at least a general understanding of the Bitcoin halving-driven 4-year cycle. If you have really been paying attention to the space, you will have noticed that each bull market leg of the cycle is accompanied by a craze of some sort. I choose the word craze deliberately because, to the rational individual and long-term investor, these speculative frenzies appear exactly as such: crazy!

In 2016/2017, it was ICOs. In 2020/2021, it was NFTs. And in 2024/2025, the craze is for memecoins.

Initial coin offerings (ICOs) were crypto’s equivalent of an initial public offering (IPO). And projects seeking to raise money for their new blockchain, app or service launched them left and right during the 2016/2017 bull market. That period saw an explosion of ICOs. Ventures with absolutely no use case for a blockchain launched on the blockchain. New coins pumped and pumped and dumped. Scams abounded, fraud ran wild and fortunes were made and lost.

A few projects survived and thrived. Ethereum completed its token presale in 2014 and launched in 2016. Investors got rich and the protocol is still developing and innovating today. It was the introduction of the Ethereum ERC-20 token standard that kicked off the ICO boom. Launching an ERC-20 token was far easier than launching an independent blockchain. And launch they did, in their thousands. Notable survivors include AAVE, Filecoin and Chainlink. The majority of ICOs however, did not make it.

If ICOs were looked down on then NFTs were truly hated. Who would have thought all those monkey JPGs would end up being worthless??? The first mover, and arguably the coolest non-fungible tokens were Cryptopunks. A collection of 10,000 8-bit-style avatars, launched on Ethereum (aha!) by Larva Labs in 2017, punks were an experiment in the tokenization of assets. Each punk was different and could only be owned by one person at a time. Initially, they were given away but by 2022, some punks were selling for millions. Punk 5822 sold for a record $24 million (8,000 ETH) in February 2022.

Many imitators followed, and soon the market was awash in Bored Apes and Miladys. Just like ICOs, some collections survived but the eventual crash in prices was inevitable.

The hate for NFTs was most intense from photographers, artists and other creators. There was an undeniable scaminess to the space and the money was too easy. Digital art went crazy regardless, with some genuinely innovative artists emerging. In March 2021, Beeple sold an NFT of a digital collage of his work for $69 million. At Christie’s, no less! Beeple still produces an impressive output of bizarre, and often disturbing artwork – find him here.

NFTs originated on the Ethereum network, but the 2020/2021 cycle saw the emergence of a new player: Layer 1 blockchain Solana. Solana uses a proof-of-stake mechanism to provide smart contract functionality. For the uninitiated, that means you can build stuff on it. NFT platforms, decentralised exchanges and more. Solana and its native SOL token flourished during the last bull market and, more importantly, it survived the chaos that followed.

And then came the memes

Memecoins are by no means new. DOGE, widely credited as the original memecoin, was created as a joke back in 2013 with the image of a shiba inu dog named Kabosu as its logo. Doge may have been a joke coin but Kabosu was a real dog, owned by a kindergarten teacher from Sakura, Japan. Kabosu and her owner became surprise celebrities in their own right and there was genuine grief when Kabosu passed away in May 2024. (RIP)

Meme Stocks and ‘Dumb Money’

Meme-based investments are not limited to crypto. You may be familiar with Keith Gill, better known as Roaring Kitty, who sparked the craze in GameStop (GME) shares that literally took down hedge funds in a short squeeze in January 2021. If you haven’t seen the movie ‘Dumb Money’, I highly recommend it.

Roaring Kitty caused a commotion last month, suddenly returning to X with a barrage of memes and kicking off another run in GME that almost made him a billionaire just last week!

The craze of the current crypto bull run has clearly been memecoins. In particular, the frenzy has been driven by the relative ease of creating new memecoins on Solana. These coins are typically inspired by internet jokes, memes and satire. They are fun and crazy, not serious investments. And yet, some traders have run up impressive returns.

Dogs are as popular as ever. The Bonk Inu (BONK) memecoin was designed to support the Solana community. It launched on Xmas day 2022 when SOL was trading at around $11.40, down some 96% from its peak of $260. (yes, yikes!) BONK was airdropped to various NFT projects, artists and collectors. Almost 300,000 wallets were created to receive the airdrop and within a week of launch, the token had risen over 2,000%. Much volatility followed!

BONK doesn’t do anything. However, the Solana and BONK communities found ways to incorporate the token into various protocols, such as De-Fi, NFTs, gaming and payments. It can be used for direct exchange, to buy NFTs, as in-game tokens/rewards, and more. It currently has a market cap of around $1.9 billion.

Astonishingly, there are now some 967 Solana memecoins trading with a total market cap of around $9 billion! Celebrities are getting in on the act, with Caitlyn Jenner and Iggy Azaelea launching their own coins. You can smell the lawsuits already…

So what do you meme?

Smart traders will undoubtedly make money in memes. However, for most this isn’t going to end well. Personally, I don’t own or trade any of these coins and I am certainly not recommending you go 100x long on Dogwifhat coin. However, the latest craze is fun to watch while providing genuine insight into where we are in the bull market cycle. Here’s how it goes: money flows into Bitcoin and Bitcoin rises. (have you seen those ETF inflows?) Then traders rotate into the L1s and L2s and they pick up. Next, the money moves to the various altcoins from larger cap to small and lastly, there’s a memecoin frenzy. This repeats with increasing intensity as the bull run builds to a crescendo. If you are trying to time your way out of the market, the memecoins act as a useful indicator of froth and irrational exuberance.

At some point in the next 12-18 months we will see Bitcoin well above its previous cycle all-time-high of $69k – which is where it sits now, incidentally. Now it becomes important to pay attention to the rotation I mentioned above. Ethereum finally turns on the afterburners, Solana goes stratospheric, AI coins go supersonic. And finally, the memes blast off.

The meme mania is the exit sign, a glowing beacon. There is only one way out and not everyone is going to fit through the door at once. Your crypto holdings have outperformed every other asset class. You have been steadily taking profits and now it’s time to push the button one last time. You must not hesitate. Unfasten your seatbelt, stand up and walk calmly to the exit, before the crush.

Last one out, turn out the lights.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.