The Psychology of Meme Coin Mania

The psychological and social processes that led to the formation of the “meme coin craze” are similar to those that lead to other crazes, but in this case it is driven by financial losses, emotional attachment, and social recognition gained through cryptocurrency markets and online communities.

Here’s a breakdown of the different psychological stages in the formation of a meme coin craze:

Disillusionment with Utility Tokens — Losses and Distrust

The personal journey starts with losing money in utility tokens or VC-backed projects, which is also the initial stage of psychological transformation:

Cognitive dissonance — This person believed in the utility or long-term value of the utility token, but after experiencing financial losses, they are conflicted. They trusted these assets to deliver on their promises, but reality doesn’t match expectations.

Loss of Trust — The brain becomes disillusioned with the promise of these utility tokens. Financial losses lead to a breakdown of trust in the system (VC-backed or utility-focused projects), triggering a psychological need to find an alternative narrative to explain why they were wrong.

Searching for redemption — After disappointment, individuals become open to new ideas, especially those that promise quicker or more dramatic financial returns, and this openness lays the foundation for their eventual turn to memecoins.

Success in Memecoin - Strengthening Beliefs through Gains

Next, the individual made some money by investing in meme coins, and with that came an emotional shift in mentality:

Relief and validation — After losing money in utility tokens, profits from meme coins feel validated. The brain starts to associate meme coins with success, triggering confirmation bias: they start to believe that meme coins not only bring profits, but are also an alternative to real utility tokens.

Reinforcement of Bias - In this stage, the brain begins to weave a narrative that memecoins will soar. Bias turns to memecoins as a new path to financial success, despite the lack of solid fundamental support. At this point, the brain does not need memecoins to have deep utility, profit and emotional relief are enough to provide validation.

Social frustration – difficulty persuading others

The individual began to promote his new belief in meme coins to others, but encountered resistance:

Difficulty in articulating a vision - While individuals strongly believe in the potential of memecoins, they have difficulty effectively communicating their vision to others. This may be due to the lack of a coherent theory behind memecoins, leaving only emotional beliefs rather than logic.

Social friction – Resistance from others creates frustration. The brain seeks social validation, but without external validation from peers, the belief remains personal and internal. This prompts them to double down on their beliefs and actively promote the meme coin on social media.

Cognitive Solidification – In the face of increasing rejection, an individual’s beliefs become more entrenched. In this stage, the brain begins to look for external reasons why others cannot understand what they “see.”

Meet a Charismatic Memecoin Theorist - Emotional Connection

The turning point came when the individual encountered a charismatic leader who presented a compelling narrative around the future of memecoin:

Emotional appeal - This charismatic theorist provides the intellectual framework that individuals need to support their beliefs. Theory explains the chaos and speculation in the memecoin world and provides a reasonable explanation for why memecoins are the future.

Personal connection – After researching the charismatic leader, individuals find similarities in their stories, which creates an emotional bond. The ideologue’s backstory resonates because it reflects the individual’s own experiences – financial loss, disillusionment, and redemption through meme coins. This emotional connection solidifies their trust in the ideologue’s perspective.

Cognitive relief — the brain finally feels relief. The charismatic character’s narrative resolves the inner conflict (between past losses and current gains) and provides a structured way to explain why memecoins are the future. The theorist’s framework becomes a new intellectual pillar for a personal belief system.

Evangelism on Social Media – Dopamine Boost

As individuals began promoting this charismatic theorist’s ideas on social media, their influence began to grow, bringing powerful psychological reinforcement:

Dopamine feedback loop - Every time an individual receives a like, comment, or new follower on social media, the brain gets a wave of dopamine. This reward mechanism reinforces the behavior of spreading the theory, making the brain feel self-affirmed through external recognition.

Reinforcement of Meme Coin Performance - If the price of the meme coin increases at this time, the individual gains more validation, further solidifying their belief in the meme coin and the theorist’s ideas. The brain begins to associate financial success with spreading this ideology, forming a powerful financial and social reward feedback loop.
Shift in social identity - As social media influence grows, individuals begin to identify themselves as evangelists or promoters of meme coins. Their sense of identity becomes closely intertwined with the success of the meme coin and the views of charismatic ideologues.

The Making of the Meme Coin Craze: Cult Leaders and Shared Belief Systems

Eventually, the individual’s beliefs became part of a larger movement, and others with similar prejudices and frustrations found the same charismatic theorist:

Discovery of the cult leader - Other enthusiasts of the meme coin, who have also lost trust in traditional tokens and are optimistic about the meme coin, eventually discover the same charismatic leader. This forms a critical mass of followers around the leader’s narrative, and individuals realize they have become part of something bigger than themselves.

Shared belief systems - memecoin cults form around the ideologue's ideas, the profitability of memecoins, and the emotional and financial success they promise. The leader becomes the center of this belief system, providing intellectual and emotional buy-in and solidifying the group's collective biases.

Echo Chambers and Group Reinforcement - As more and more people join the movement, the group forms an echo chamber where members constantly reinforce each other's belief in memecoin. The theorist's views become almost sacred and cannot be questioned. At this point, the individual brain operates in a closed system, dissenting opinions are ignored, and the collective belief in memecoin grows stronger.

Cult Behavior—Complete Cognitive Commitment

At this stage, individuals are fully committed to the meme coin craze:

Ingroup/outgroupthink - The individual now views memecoin believers as the “ingroup” and memecoin skeptics as the “outgroup.” The brain begins to protect the fervent belief system, ignoring skeptics and firmly maintaining the memecoin narrative.

Cognitive rigidification and social identity - Individuals’ identities are now inextricably linked to the meme coin movement. Their self-worth is derived from their social media influence and meme coin performance, with leaders’ opinions being seen as absolute truth.

Continuous Dopamine Rewards - Individuals continue to receive regular dopamine hits from social media interactions and meme coin price fluctuations, making it increasingly difficult to disengage from this belief system.

In this process, the individual’s mindset moves from financial disillusionment to emotional connection with a charismatic leader, then through intellectual bias validation, to full identification and commitment to the cult meme coin.

This cycle is fueled by emotional, social, and financial reinforcement, creating a powerful feedback loop that is difficult to break. The meme coin craze operates as a shared belief system, providing financial hope and social belonging, and at the center of it all is the charismatic ideologue.