In December, a lot of cat-based meme coins hit the Solana shitcoin casino. I decided to throw $500 at a handful of them and hold them till moon or doom. One of those ended up being Popcat, which, even though I sold prior to its most recent peak, was still a 25x return, more than making up for the others that failed to perform beyond a 0-2x or died completely. In the prior cycle, one of my best trades was an NFT (~70x) despite my initial disinterest in NFTs and Memecoins. Over the years, I have found that if I am tempted to write something off without trying it first, it is usually a good idea to put some money into it and only THEN see how I feel. It’s surprising how much our brains can change when we have even a nominal amount of money on the line.
When something seems silly or unserious, it often keeps others away because they feel it is beneath them. This gives early adopters with an open mind access to a market with fewer competitors than the bigger markets. These early adopters see outsized gains since any market that starts with a small number of participants and grows in size will reward the early participants. This makes the people who dismissed the new thing even more upset as they see other “dumber” or “less serious” people make money on frivolous things. Fueled by the emotions of missing out on money people usually take one of two paths:
They conclude they were wrong to dismiss the new thing and consider that there may be more to it than they initially thought. These people become the next wave of adopters.
They move on with their lives like a healthy person (a small minority).
They become this meme and either dedicate their lives to telling people “this isn’t going to end well” or become truthers (“it’s all money laundering!”).
People who hate things are more vocal than those who love the same thing and that hatred ends up being the fuel that powers word of mouth and helps bring additional awareness to the target of their ire. Given that all social media platforms are in the business of disseminating content that boosts engagement, and people have a tendency to engage with content that upsets them, social media ends up being the perfect marketing channel for such new markets. Strong emotional reactions signal a deep resonance, which is crucial for things that possess no intrinsic value, like memes and NFTs.
Still, I find myself a little disgusted that I’ve spent this past week asking myself what the fair market value for a meme coin of a monkey getting a haircut should be (currently trading at $16M with $900K of liquidity locked, whereas most cat coins are trading at $30-$500M, seems undervalued - no?). If I stop to think about it, I can’t help but ask myself, “What am I doing with my life?” At the same time, I’ve undeniably done pretty well with these frivolous things, so ignoring them because they are dumb seems like an ego-driven move. I must tell you, though, nothing makes you feel dumber than losing money on a meme coin, even if you anticipate losing money on most of them and making it up with the one that hits.
Meme coins have captured a lot of the speculative fervor that NFTs had last cycle but have become even bigger due to meme coins having better liquidity since they are fungible and largely due to the negligible fees on Solana (and to a lesser extent, BASE). What I’ve come to recognize and appreciate about these markets with zero fundamentals is that they are truly trader’s markets. Since there are no cashflows, you’re purely trading against what others think the meme is worth (even though we all know it is logically zero). People like to talk about efficient markets, but the truth is that the efficiency of markets is a spectrum, and memecoins are some of the least efficient markets on earth.
Ultimately, that is a big part of why I participate. I love trading against people. Fear, greed, loss aversion, herding, euphoria - the entire human experience is all in the charts. It’s also where the action is this cycle and where I’ve had a good amount of success in the past so as they say, you gotta keep dancing while the music is playing.