Original title: NFTs and Memecoins in Last vs Current Bull Markets
Written by Neptune Mutual
Compiled by: Vernacular Blockchain
In recent years, memecoins and NFTs have become notable assets in the crypto world.
Memecoins are cryptocurrencies inspired by internet memes that have gained considerable traction and gathered millions of followers. Community support and social media buzz have fueled significant price growth. NFTs, on the other hand, are blockchain-based digital assets that represent ownership of unique items such as art, music, or collectibles. Unlike memecoins, NFTs usually have some utility within their ecosystem.
Bull markets are known for their price increases and play a vital role in asset growth. During bull markets, investors are more willing to take risks and try novel assets, leading to a surge in the popularity and value of memecoins and NFTs. This environment drives innovation and introduces a wider audience to these digital assets, highlighting their potential and risks.
In this article, we will explore the dynamics of memecoins and NFTs in previous bull runs and the current bull run.
1. Memecoins in previous bull markets
In the previous bull run between 2020 and 2021, the institutional adoption of Web3 became a well-known fact. Bitcoin broke through its previous high and reached $64,000. This rise marked a shift in user perception, sparked speculation, and led to the adoption of cryptocurrencies by many institutions and organizations.
During this phase, memecoins like Dogecoin and Shiba Inu became prominent players in the cryptocurrency space. The prices of these memecoins soared to extraordinary heights, fueled by social media frenzy and retail investors’ fear of missing out (FOMO).
Dogecoin was originally created as a joke in 2013, but it gained serious traction in 2021. In fact, Dogecoin's price grew by 3,300%, making it the tenth-largest cryptocurrency by market cap. In May 2021, it reached an all-time high of $0.731. This was largely due to the support of celebrities such as Elon Musk and Mark Cuban.
Shiba Inucoin, often referred to as the “Dogecoin Killer,” follows the popularity of Dogecoin and the growing meme culture. Platforms such as Reddit, Twitter, and TikTok have played a key role in spreading memes, generating viral interest, and driving up prices.
Many investors view these coins as lottery tickets, hoping to profit from short-term gains rather than making long-term investments. Media coverage has a huge influence, amplifying price movements through sensational headlines and viral tweets.
2. Memecoins in the current bull market
Today’s bull run began around April 2024, with new memecoins like PEPE rising in popularity, joining the ranks of previous meme-inspired cryptocurrencies. Based on the “Pepe the Frog” meme, PEPE quickly gained traction for its interesting concept and active community.
The market dynamics have changed and investors have become more cautious. Instead of blindly chasing any memecoin, they focus on the potential use of the coin, the strength of the community, and the financial model. This has made the memecoin market more stable compared to previous periods.
Investor sentiment also seems to have changed. People are not only interested in quick profits, but also in the long-term prospects and community activities of these coins. The Memecoin community has become stronger and more active in promoting their coins, sometimes even creating real-world projects and activities.
Despite investors being more vigilant and cautious, they have still fallen victim to multiple memecoin attacks, such as the CONDOM-operated hack and rugpull of NORMIE.
3. NFTs in previous bull markets
During the last bull run, the popularity of NFTs (non-fungible tokens) soared and became a major trend in the crypto world. Although NFTs began to be publicly issued in 2017 after the approval and adoption of the EIP-721 standard, that year was a year of experimentation and development. The launch of Cryptopunks and CryptoKitties was very eye-catching during that period and helped the NFT ecosystem form its appearance.
The exponential growth of NFTs occurred during the bull run of 2020-2021. Key trends during this phase included the rise of digital art and collectibles. Platforms like CryptoPunks and Bored Ape Yacht Club became extremely popular, providing digital avatars that users could own and trade. These NFTs often serve as status symbols and collectibles in digital communities.
The market has grown rapidly, driven by the novelty of owning digital assets and the ease of trading on blockchain platforms. Media coverage and celebrity endorsements have driven public interest, bringing NFTs into the mainstream and encouraging more people to explore this new form of digital ownership.
High-profile sales have made headlines, with some NFTs selling for millions of dollars. Beeple’s digital artwork Everydays: The First 5000 Days sold for a record $69.3 million in March 2021. In 2021 alone, approximately $41 billion worth of cryptocurrency was spent on the NFT market, demonstrating its rapid rise and huge market interest.
In terms of attacks, Stazie lost about $1 million to a phishing scam in August 2021. Iconics, Evolved Apes, Bored Bunny, and Frosties are some of the scam projects that were manipulated after the bull run.
4. NFTs in the current bull market
After the last bull run, the NFT market saw a sharp decline, leading to the NFT crash in 2022. Many NFTs, including popular works, have performed weakly and reached rock-bottom prices.
While there is some renewed interest around 2023, the NFT market may only recover to a certain extent during the bull run of 2024. However, it is unlikely that we will see the same hype and chart explosion as in 2021.
An important development in the current bull market has been the evolution of NFTs, with new trends and their expansion into gaming, the metaverse, and sports. This allows players to own and trade unique items in virtual worlds and games. Similarly, traditional brands entering the NFT space may have given it a boost. For example, Starbucks launched its first paid NFT series in March 2023, selling 2,000 digital stamps at $100 each in just 20 minutes.
Pudgy Penguins is a prime example of an NFT project that is currently making a splash. Although it was launched in August 2021, it gained the most attention in the first few months of 2024. These PFT-themed artworks have soared due to their appealing art style and strong community.
In short, investor attitudes are maturing, with more emphasis on the actual benefits of NFTs rather than speculative trading. In addition, there are now many smaller NFT projects that are more affordable and have practical uses, rather than just a few high-value collectibles as in 2021.
The industry still faces challenges such as rug pulls, phishing attacks, smart contract vulnerabilities, DeFi wallet issues, etc., which may affect user confidence. For example, in September 2023, the phishing attack against OpenSea revealed security issues that need attention.
Similarly, MetaDragon is a recent example of a hack caused by a smart contract vulnerability.
5. Comparative analysis
Comparing the previous bull run and the current one, meme coins and NFTs show some similarities and differences.
During both periods, meme coins like Dogecoin and PEPE were highly dependent on social media hype and community support to drive interest and price. However, current investors are more cautious, evaluating long-term value and community engagement rather than just chasing hype.
Trends in NFTs have also changed. High-priced sales and widespread enthusiasm for NFTs as collectibles have cooled. Today, NFTs are more focused on utility in gaming, the metaverse, and integration with traditional brands, leading to a more balanced growth pattern and more practical projects.
In terms of security, both markets have experienced hacks and fraudulent activities resulting in millions of dollars in losses. During both bull markets, fraud, phishing, and smart contract vulnerabilities were exploited to affect digital assets. Addressing these challenges is critical to maintaining investor confidence in these assets.
Legitimate meme coin and NFT projects are constantly strengthening their defenses, conducting smart contract audits and bug fixes. As a user, you need to remain vigilant and check projects for potential vulnerabilities. Reviewing a project’s community and user sentiment may help.
Additionally, the use of multi-signature wallets (which require multiple approvals to make a transaction), advanced consensus mechanisms, and hardware security modules are essential to building a more secure infrastructure.
Another effective way for digital asset owners to protect their assets is to consider DeFi insurance. It provides financial protection against losses due to hacking, exploits, or other unexpected security breaches.
