“A believer is not merely someone who worships a deity. When someone dedicates themselves with complete enthusiasm to a cause, a person, or even anything, they become a believer.”

In the crypto world of 2024, Memecoin culture has shone brightly. Countless once-skeptical, proud investors have gradually succumbed to its allure, now rallying behind it. Beyond “winning by rising prices,” Memecoins thrive due to their unique cultural atmosphere, viral marketing, fair distribution models, and, most crucially, the influence of Memecoin Cults, which are key to their price performance.

This article delves into Memecoin Cults, analyzing the factors driving the Memecoin sector’s popularity surge and future trajectory. Our aim is to equip ordinary investors with the knowledge to navigate this Memecoin phenomenon more skillfully.

What are Memecoin Cults?

Looking back at the history of cryptocurrency development, although each bull market has seen the rise of super Meme projects like Dogecoin, Shiba Inu, and Pepe, the scale and momentum of their current popularity have exceeded everyone’s expectations.

According to CoinGecko, the Meme sector’s total market capitalization has soared to $59 billion. Nine Meme projects now rank among the top 100 cryptocurrencies by market cap. The rise of one-click token issuance platforms like Pump.fun has led to thousands of new Meme projects launching daily. Perhaps most notably, the Meme sector’s price performance has outstripped all other cryptocurrency sectors this year.

Source: The Memecoin Supersycle @MustStopMurad

With increasing discussions and trading volumes, Memecoins have evolved beyond mere speculative assets to become a significant force in the cryptocurrency market. They represent one of the most active and fervent areas in the entire crypto world.

Memecoin Cults have played a pivotal role in elevating memecoins to iconic status. These cults are communities or cultural phenomena that coalesce around specific Memecoins. Through coordinated efforts and savvy use of social media, these communities significantly boost the popularity and value of their chosen Memecoins.

While Memecoin Cults are not actual cults, they share several striking similarities, including fervent devotion, unwavering loyalty, incentive structures, steadfast commitment, and intense leader veneration.

Newly rising Meme KOL Murad believes that strong communities resemble “cults” and are key drivers of Memecoin price performance. Within such communities, members’ loyalty and enthusiasm for a token often create supply constraints, resulting in a “diamond hands” effect. Even as token prices rise, community members are reluctant to sell, as their sense of identification and belonging with the token motivates them to hold. One of the best ways to test the loyalty of a cult-like community is through market volatility. Only after enduring several significant price drops can the community’s resilience and longevity be proven. In turn, when demand rises, these steadfast holders can accelerate rapid price surges for Memecoins.

Characteristics of Memecoin Cults

Compared to the communities of other projects, Memecoin Cults are composed of investors and supporters passionate about a particular Memecoin. These communities are more active, loyal, vibrant, and cohesive. Members share enthusiasm for the same Meme culture and actively interact and share content on social media platforms such as Twitter, Reddit, and Telegram, aiming to promote the visibility and adoption of their token.

Based on their Meme foundation, the characteristics of Memecoin Cults include:

• Community-Driven

Memecoin Cults are community-driven and usually formed spontaneously by users. Members collectively discuss decisions and frequently engage in group activities, such as coordinated buying or organizing online events, to further enhance the token’s exposure and acceptance.

• Sense of Belonging

Members of Memecoin Cults often have a strong sense of identity and belonging to the community. They collaborate closely, creating easily shareable content such as Memes and videos, and frequently promote their supported token on social media platforms.

• Investment Passion and Commitment

Memecoin Cults members are typically enthusiastic about investing, passionately buying and holding the token. They believe in the community’s ability to drive price increases and often showcase high promised returns. Devoted believers in Memecoin Cults are often early beneficiaries who have gained substantial profits from holding the token, and they encourage others to hold long-term.

• Leader Worship

In the almost religious fervor of these communities, leader worship becomes inevitable. Community members look to leaders for a strong knowledge framework, emotional reinforcement, and faith support. If the leader’s charisma is strong enough, they can attract a large following, creating a stronger and more insular “cult” community.

Building a token community is simple, but creating a Memecoin Cult is far more challenging. This makes Memecoin Cults more competitive, as these communities provide greater support and loyalty.

Analyzing the Reasons for Memecoin Popularity

The culture of Memecoin Cults is a natural outcome of the rising fervor surrounding Memecoin worship. Understanding the emergence and development of Memecoin Cults essentially involves exploring the reasons for memecoins’ popularity.

Memecoins are a type of cryptocurrency based on memes or pop culture elements. They lack clear technological innovation and are not designed to serve practical purposes. For this reason, Memecoins are often viewed as symbols of speculation and, despite leading price gains in the market, are typically dismissed as a form of false prosperity.

Interestingly, as Memecoins continue to grow in scale, their identity has transformed. They are no longer merely tools for speculation but represent a new economic model—a tokenized community.

Factors Driving the Popularity of Memecoins:

1) The Wealth Effect

A pragmatic reality is that over 90% of crypto users are motivated by speculative profit. As a result, each market cycle sees the emergence of new narratives and sector rotations, such as DeFi, GameFi, NFTs, DEXs, DePIN, Restaking, L1/L2 chains, etc. However, when the market enters a phase of narrative fatigue and dwindling funds, differentiation begins.

Data shows that Memecoins have been the best-performing sector this year, far outpacing mainstream tokens, new altcoins, and VC-backed projects. For users driven by short-term speculative psychology, Memecoins—though akin to a lottery game—can yield significant returns if one strikes it big. The market’s short-term mindset easily triggers FOMO behavior.

Source: Dune Analytics @cryptokoryo_research

The gambling-like nature of this game continuously stimulates the brain’s release of dopamine. Dopamine, a neurotransmitter, activates the brain’s reward system, inducing feelings of pleasure, satisfaction, and happiness. As external stimuli intensify, dopamine levels chronically increase, potentially leading to addiction. If Memecoin prices experience sharp declines, dopamine levels drop, causing anxiety, tension, and depression. Frequent dopamine fluctuations over time can alter the brain’s reward system, influencing users’ risk preferences and investment styles.

2) A Shift in Market Investment Logic

Investors embracing Memecoins do so not only because of their wealth-generating potential but also because of a crisis of trust in utility tokens and VC-backed value systems.

Despite over a decade of development in decentralized technology, truly practical applications remain scarce. Yet, market capital continues to fund this trial-and-error process. The current market, however, grapples with narrative fatigue, a dearth of technological innovation, and an abundance of projects that merely “reinvent the wheel.” As demand consistently fails to materialize, market investment logic inevitably evolves.

As for the once highly-promoted VC-backed projects, crypto users, having undergone repeated market lessons, have gradually become disillusioned. One major critique of VC-backed tokens lies in their high fully diluted valuations (FDVs) and low initial circulating supply. This market structure severely limits upward momentum in secondary markets. Most star projects launch at prices several times higher than their private rounds, leaving secondary market investors “holding the bag” while facing ongoing token unlocks that generate immense sell pressure. According to a report by Token Unlocks, an estimated $155 billion worth of tokens will be unlocked between 2024 and 2030.

Omid Malekan, a Columbia Business School professor and blockchain author, has commented that “Memecoins represent a form of economic populism, serving as a rebellion against VC-backed token economics.”

3) Promotion by KOLs, Institutions, and Capital

The market is always right (driven by profit.)

Under this dynamic, Memecoins have garnered increasing attention from celebrities, KOLs, institutions, and major exchanges. Examples include Elon Musk’s multiple endorsements of Dogecoin and other Memecoins, the rise of Meme KOLs like Ansem and Murad, and institutions such as Wintermute and Jump Trading rushing in to accumulate tokens.

Notably, top-tier exchanges have embraced Memecoins, listing several projects in succession. This has significantly improved liquidity and market visibility while broadening Memecoins’ potential audience.

4) Fair Launch Mechanism and Social Media Spread

One of Memecoins’ defining characteristics is their Fair Launch mechanism, which is a strong endorsement of decentralization. With no pre-mining, no private sales, and 100% circulation, Memecoins eliminate early investor and team advantages, reducing the potential for insider manipulation. This provides all participants with equal opportunities. Additionally, Memecoins’ humorous and accessible nature, coupled with low barriers to entry, makes them ideal for viral growth through social media and community-driven efforts.

5) Improved Supporting Infrastructure

As Memecoins become a new trendsetter in the crypto market, related tools and services have gradually improved.

For example, platforms such as GMGN, DEXTools, and DexScreener offer users comprehensive project data analysis for Memecoin participation. Meanwhile, one-click token issuance platforms like Pump.fun have drastically reduced the barriers and costs associated with token creation, providing users with greater flexibility and diversity in their Memecoin ventures.

How Should Ordinary Investors Participate in Memecoins?

The cultural narrative of Memecoins gives them strong vitality, offering novel experiences and greater imaginative potential. However, as a crypto investor, it’s essential to participate cautiously—if you choose to participate at all. In fact, avoiding involvement entirely is often the best strategy.

The Memecoin market still largely operates on Ponzi-like schemes, with a significant survivor bias. Most participants leave with a loss of their principal investment. Without a well-developed trading system of your own, it’s better to stay away altogether.

Currently, investment strategies in the Memecoin market generally fall into two categories:

1) Preference for “Diamond Hands”

This strategy involves casting a wide net with small investments, aiming for big returns. Investors buy small amounts of tokens in their early stages and sell at opportunistic highs. While most Memecoins lose their value within a day or two, hitting the jackpot on one can yield returns of tens or even hundreds of times the investment.

However, when selecting early-stage projects, investors should conduct thorough due diligence, focusing on details such as the project’s contract, token holdings, and on-chain liquidity pools to avoid scams like Rug Pull schemes.

2) Preference for Relative Stability

Memecoin KOL Murad advocates for a more stable trading approach, favoring relatively mature tokens and reducing trading frequency. Murad’s criteria for token selection include:

• Targeting mid-cap tokens with a market cap between $5 million and $200 million.
• Favoring Solana and Ethereum over Base, Ton, and Sui, as the former two exhibit wealth spillover effects.
• Ensuring the project has been launched for at least six months.
• Selecting projects that have endured at least two 70% price crashes.

At its core, Memecoin investing is a game of attention. Once interest and momentum fade, a token is often close to its demise. Token holders should continuously monitor on-chain liquidity changes and community dynamics. If a token’s liquidity pool becomes too small, even profitable investments may be difficult to sell at market price due to excessive slippage.

Future Outlook for Memecoins

With the sustained popularity of Memecoins, it is foreseeable that more capital and attention will flow into this sector. The following trends may emerge:

For project teams and blockchains, Memecoins serve as an excellent testing ground for attracting users and capital. They are likely to continue establishing Meme-focused foundations and incentive programs to support the growth of Memecoin projects within their ecosystems.

Secondly, the infrastructure supporting the Memecoin ecosystem will continue to evolve and improve. Beyond the current tools for trading analysis and token issuance platforms, more innovative and specialized products and services will emerge, enhancing the professional and niche aspects of the Memecoin space.

Moreover, Memecoin projects themselves may introduce technological innovations or pivot toward more practical applications, such as offering real-world services or products to create added value.

In March, Ethereum co-founder Vitalik Buterin published an article about Memecoins. He suggested that alongside equitable value distribution, Memecoins could strive to generate more positive and lasting social value, such as contributing to charity, environmental protection, and other public causes.

Lastly, the significant volatility and speculative nature of Memecoins also pose regulatory challenges. To protect investors, there may be increased implementation of protective measures to prevent fraud and misconduct, thereby enhancing overall market trust.

Conclusion

As an investor, the primary principle in the crypto market is to maintain an open mindset. Memecoins have evolved from initial speculative hype to being imbued with entirely new meaning, marking a shift in market investment logic and ushering in a new economic model—community tokenization.

In this wave, Memecoin Cults, as a reflection of community cohesion and loyalty, play a vital role. We should objectively examine and embrace these innovative forces and trends while recognizing the chaos, disorder, and scams rampant in the Memecoin market.

Memecoins can either keep your dopamine levels high or cause your wallet to empty overnight. As a crypto investor, always assess your risk tolerance, approach any investment cautiously, stay vigilant about market dynamics, and be aware of potential risks.