October 14, 2024
Smart Crypto Strategies to Navigate Financial Nihilism
Dear Subscriber,
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| By Marija Matic |
Like crypto itself, financial nihilism can trace its origins to the 2008 financial crisis.
Arising from the breakdown of public trust in the traditional financial system, financial nihilism represents a mindset in which individuals view the financial system — encompassing money and investment practices — as lacking real value or meaning.
Those who follow this philosophy believe that financial planning is useless due to the system’s inherent unfairness.
And traders who agree often favor high-risk, high-reward investments like meme stocks — i.e., GameStop (GME) — and memecoins.
That’s why, despite their unconventional origins, memecoins continue to grow and exhibit unique market dynamics throughout their “super cycle.”
And now, their influence is undeniable. As of the time of writing, ten out of the top 100 cryptocurrencies are memecoins.
This trend underscores their enduring appeal and ability to capture investor interest. But the window to make the most of this opportunity may be closing.
Bitcoin vs Memes: A Tale of Two Markets
Over the past six months, memecoins have thrived. Many have outperformed Bitcoin (BTC, “A”) during this time, highlighting their potential as alternative investment vehicles.
This strong interest is likely to continue as the broader crypto market remains in a low-volatility phase. That’s because memecoins offer leveraged exposure and the possibility of substantial gains.
So, despite established sectors vying for liquidity, the current landscape remains captivated by these playful tokens. As traders await BTC’s next major move, memecoins present a compelling alternative.
But while Bitcoin’s volatility has remained subdued for an extended period, that is likely about to end.
Usually, long periods of quiet like this historically precede significant price movements. And with Bitcoin currently undergoing one of its tightest prolonged squeezes in history, a charged atmosphere — one ripe for a potential breakout — has settled over the markets.
(To learn more about when our cycles expert Juan Villaverde expects this breakout and how high he believes it can go, click here.)
However, when more serious sectors begin to gain momentum, liquidity may shift their way as investors gradually transition to capital protection strategies over time.
For now, though, the market is still captivated by these playful tokens.
Its grassroots appeal sets memecoins apart from the rest of the altcoin market. Which works in its favor as investors are sick of oversupply and venture capitalists extracting value before tokens even launch.
And that means you can still find potential gains in memecoins. If you know where to look.
The Memecoin Hotspots
Solana (SOL, “B”) continues to be the leading blockchain for memecoins with the highest level of activity in this sector.
The market cap of Solana's memecoins has surpassed $11.5 billion today:
While Solana's memecoins are likely to maintain their popularity, choosing the right ones can be a challenge.
As a result, investors may discover more accessible opportunities on emerging smaller blockchains, like Sui (SUI, Not Yet Rated), which are beginning to attract significant holder counts.
In fact, there are four other considerations investors should have in mind when looking for their memecoin investment:
- Strong rebounds: Dr. Bruce Ng has introduced this strategy before. But it’s a solid one. Focus on coins that bounce the strongest out of broad market drawdowns. Especially those that have survived multiple large drops, as they are often indicative of a robust community and sustained interest.
- Growing community: Speaking of community, look for tokens with increasing social activity and a growing number of holders. Healthy wallet distribution further enhances a coin's stability and potential for growth.
- Exchange Endorsement: Memecoins that are listed — or better yet, poised to be listed — on major exchanges like Binance and Coinbase often gain credibility, attracting more investors and enhancing liquidity.
- Back to Basics: Prioritize coins free from insider control, presales and venture capital influences. Tokens that thrive on organic community engagement often stand the test of time.
As 2024 wraps up, it will likely be worth keeping an eye on these playful tokens. Careful investors may find allocating a small sum to them may turn profitable. Particularly in a world where traditional measures of value are increasingly being challenged and financial nihilism has run amok.
I should repeat however that memecoins are volatile assets.
The adage of “only invest what you can afford to lose” applies to all investments. But it is especially appropriate when it comes to memecoins.
If you do add a memecoin to your portfolio, be sure to have your exit strategy ready and stick to it. This way, you can combat the volatility-fueled FUD and any emotional trading.
Because if you have the risk tolerance for it, memecoins may just pave an unexpected path to profits in the wild world of crypto.
Best,
Marija Matiฤ
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