Over the past year, Memecoin has been the best performing sector in the cryptocurrency space. Currently, the total market capitalization of Memecoin has exceeded $100 billion. This makes its scale surpass the sum of DeFi (Decentralized Finance), DePIN (Decentralized Physical Internet Network), gaming, and metaverse.
Given the scale and diversity of this asset class, we have attempted to map the market to identify potential investment opportunities.
We studied the best performing tokens each quarter this year, and the results confirmed our suspicion: Memecoin has dominated every quarter. In the first quarter, $POPCAT, $WIF, $MOG, and $MYRO performed well; in the second quarter, $PONKE, $SPX, $TURBO, $GIGA, $WOJAK, $BRETT, and $MOG were strong; in the third quarter, $SPX, $GIGA, $FUD, and $MUMU emerged as the leaders.
When attempting to apply analytical methods to Memecoin, you will quickly notice the importance of understanding the "meta" narrative. This is a consensus for cryptocurrency in general, but in Memecoin, this importance is amplified. Here is an extended timeline highlighting some key meta narrative inflection points and origins.
Prior to 2021, the market was dominated by Doge (a Dogecoin). Subsequently, Shiba Inu emerged as the first true "Doge killer". People naturally flocked to it, hoping to replicate Doge's success. This desire to find the "next..." ultimately formed a meta narrative. Shib's success in 2021 spawned many other Memecoins related to dogs or Elon Musk, which became the first true Memecoin meta narrative.
In 2023, the popularity of Pepe (Pepe the Frog) brought a wave of Memecoins themed around frogs or "bro" culture. Shortly after, the emergence of Bonk and Wif established Solana as the dominant Meme chain, ultimately leading to the rise of pump.fun. All of this reached a crescendo in the first quarter, triggering the first widespread Memecoin mania, with new meta narratives forming almost weekly or even daily. After reaching a local peak in March, the market cooled down during the summer. Meanwhile, the Memecoin community and network effects framework proposed by @MustStopMurad gained significant traction, attracting a lot of capital into "cult coins" like SPX6900.
Recently, with the breakout of Bitcoin prices, a new wave of mania has emerged, with new meta narratives constantly forming around $GOAT by @truth_terminal, the cute hippopotamus $MOODENG, and $PEANUT (now defunct, may it rest in peace).
Now, with so many meta narratives that it's difficult to track, we've attempted to categorize the market by theme.
It's clear that Dogecoin-related tokens still dominate the Memecoin space, primarily driven by Doge. However, when we started compiling this data a few weeks ago, the Sentient AI category was almost non-existent, and the Martyr category was not yet fully formed (respect to the OG $Harambe). This indicates that this asset class is evolving rapidly.
As expected, the dominance of the Dogecoin sector has been declining since the introduction of Pepe. This trend is likely to continue as new meta narratives form and other sectors come into the spotlight.
Observing the changes in the weights of these different categories over time reveals some interesting trends. For example, in 2023, when the market did not have much new capital inflow, Crypto Culture tokens like $bitcoin received attention. But from the latter part of that year, as new capital flowed in, Crypto Culture gradually gave way to a broader Internet culture (such as $giga, $npc, etc.).
As we mentioned earlier, the rapid rise of tokens like $GOAT and $PEANUT is astounding. While it may be too early to upgrade them from meta narratives to new categories, there are already multiple AI Meme projects with market caps in the hundreds of millions.
There are also some categories, such as celebrity tokens and political-themed Memes, that saw some growth earlier this year but have since cooled off.
Over time, Memecoin will likely become a microcosm of the cryptocurrency market, with Doge playing a role similar to Bit. A few "cult coins" may persist long-term, with their communities steadfastly holding, while most tokens may be fleeting, similar to the 2021 NFT craze.
That said, there is clearly a huge opportunity in being early to a new Meme or meta narrative. Internet culture and Sentient AI are expected to be the two fastest-growing categories. Internet Memes have already gained widespread recognition and are associated with a wealth of cultural references, giving them an inherent advantage over other categories. Meanwhile, Sentient AI will combine the most exciting technology with the most volatile asset class, potentially continuing to dominate the Meme market.
In terms of potential market space, there is still an opportunity for new animal-themed projects - the market surprisingly lacks representation from zoo animals (such as tigers, giraffes, zebras, etc.). Additionally, existing fan bases (superheroes, sports, etc.) could be tokenized in creative ways.
We welcome feedback or alternative perspectives on the market. It should be emphasized that this is absolutely not financial advice.
