The Meme Coin Meltdown
When a friend of mine asked for my professional opinion on Ski Mask Dog, I thought I was having a stroke.
With Bitcoin officially breaking the $100k barrier, crypto is reaching a fever pitch last seen in 2021. Along with this comes inevitable interest in more niche cryptocurrencies that appear from thin air. According to CoinBase, there are over 11,000 tradable crypto coins, more than the 8,000 tradable stocks on all US stock exchanges.
The vast majority of these coins are valued in fractions of US cents and show unimaginable amounts of volatility. Backed by nothing but hype driven by Twitter influencers, these smaller meme coins have a tendency to be “pumped and dumped” in days or hours. Such schemes, usually orchestrated by groups of crypto traders, aim to artificially inflate the value of specific coins via social media promotion, only to all pull out simultaneously, leaving others footing the bill.
Notably this week, the meme coin $HAWK was launched on Wednesday by memestar-come-podcast-host Hawk Tuah Girl, rocketing 900%, only to completely collapse less than two days later. Crypto analysts are suggesting a coordinated “rug pull” event exploiting the meme star’s hype to target retail crypto traders left holding now worthless meme coins.
Trading these types of meme coins is little more than gambling, albeit with even less regulation. Meme coins attract retail traders looking to get rich quick, and unfortunately, it’s often the people with the most to lose who are left worse off. So, the next time someone on Twitter tries to sell you “Super Monkey Coin X” ask what you’re really buying into and what their intentions are in spruiking this coin.
To be clear, I’m not writing this article to discredit cryptocurrencies as a general concept, but rather to point out the worryingly unregulated side of these coins. Without better regulation, meme coins will remain a dangerous playground for opportunists, leaving naive retail traders to pay the price.
