The Avid Investor's Guide to Memecoin

Your friend knows next to nothing about cryptocurrencies, but he's already rich. Why? Because they bought a token with a dog wearing a hat on it.

The hat keeps on wearing, so the price keeps climbing. Get it — this meme is about to go mainstream in Las Vegas, thanks to a community effort to raise $650,000 to light up the giant ball, a new Las Vegas landmark.

Memecoin is very popular right now.

Historically, memecoins have been among the best performing assets. Let’s take a quick trip down memory lane and look at some of the brightest stars in the memecoin galaxy:

• Dogecoin (DOGE) — Musk’s favorite meme coin, which was featured on SNL and is now part of meme coin history, has a market cap of $20 billion.

• Shiba Inu (SHIB) — Shiba Inu is to Dogecoin what alt-L1 trading is to Ethereum; it is a beta game that follows in the footsteps of DOGE and is currently only one place behind DOGE with a market cap of over $10 billion. At its peak, it even reached a staggering $40 billion, a return rate of 8,000 times compared to the beginning of 2021.

• Pepe (PEPE) — Lately, we have examples like PEPE that are showing early signs that we may finally be out of the bear market. PEPE reached a market cap of $1 billion within a month of its launch and currently holds a market cap of $3 billion.

• Bonk (BONK) — The memecoin was one of the main catalysts for the resurgence of the Solana ecosystem, surging from a $30M market cap to $1.5B in just over a month (a quick 50x increase) and is still an outstanding performer at $2.5T after a small dip.

• Dogwifhat (WIF) — This memecoin has become Wall Street’s iconic bull run, and it shows no signs of stopping. With a market cap of $2.25 billion, WIF is the leader among Solana memecoins.

But let’s be honest, memecoins are a gamble. There is no foolproof strategy for investing in them — it’s either Valhalla’s moonshot, or you could see your entire net worth wiped out.

The jury is still out on whether memecoins are good or bad. But one thing is certain: memecoins have become the life of the bull market. They attract people to the blockchain, promote cross-chain activities, and offer a golden lottery ticket to invest in cryptocurrencies.

The following points are a guide to evaluating memecoins so you don’t get caught up in the hype. These tips can help you set the criteria to define what memecoins make for attractive investment opportunities. Let’s dive in!

1. Establish a trusted network

Don't get your alpha from your favorite Twitter influencer.

Timing is everything in crypto, especially memecoins. Being early can mean the difference between a 5x gain and a 100x gain. To be early, you have to understand the “alpha chain” and how information spreads.

If you're taking your cue from a Twitter influencer with a large following, you're probably late to the party. This doesn't always spell disaster, but it can mean that the insiders who got in first are ready to "dump their bags," leaving you with no choice but to become a "community member."

However, it’s impossible to keep an eye on the cryptocurrency market and be the first to jump on every opportunity. That’s where the friends you make during the bear market come in — people you can trust and who have similar interests to you.

Together with your team, you can cover more ground, pool insights, and validate each other’s hunches. That way, if the majority of your team agrees that a memecoin looks promising, it’s likely to have wider appeal, increasing your odds of making the right decision.

It's like having a group of friends who can help you discover the next big thing - if you all agree on the meme, then it has potential. But if you try to figure it out on your own, sometimes you might fall short.

2. Make full use of data tools

To make smart investment choices, you need the latest and most accurate information.

Tools like Dexscreener and blockchain explorers are your best friends in collecting the necessary data points.

For example, for memecoins, token distribution is a key metric. It tells you whether the memecoin has real community support or is just a few insiders trying to make a quick buck by pumping and dumping.

Here’s how to view memecoin token distribution:

• Spotting whales - Use a blockchain explorer to enter the contract address of the token. Navigate to the “Holders” section to see how the tokens are distributed among the holders. A good sign is that there is no single whale holding all the tokens.

• Healthy Spread and Growing Token Holders — A well-spread token supply generally means a more stable and broader community. If you notice a diverse group of holders slowly but surely accumulating more tokens, it could mean they believe in the future of the token.

• Fair launch — Focuses on the initial distribution of tokens after they are released. A fair initial distribution model, rather than a disproportionate allocation to the development team or early investors, can be a positive sign.

3. Tracking Project Communications

For any cryptocurrency project, whether it’s a memecoin or one that caters to a niche, having a solid online presence is key.

If you like the meme potential of a project, make sure they have demonstrated some appeal in terms of conveying their attention span.

This means that a beautiful website, an engaging X feed, and an active Telegram group are all non-negotiable. They are the pillars of communication, community, and branding — the very things that can make or break a project’s viral reputation.

The website is the official billboard for the project. This is where the memecoin comes into its greatest effect.

Telegram channels are direct lines to the community where you can see active community members and memes.

And Twitter? That's the megaphone. It broadcasts the story of memecoin to the world.

Memecoins that gain a foothold on these platforms, combining humor and community engagement, are more likely to attract attention and become wildly successful.

4. Know your limits in on-chain casinos

Remember the golden rule: only bet what you can afford to lose.

Memecoins are fun and can be a get-rich-quick scheme, but they are unpredictable and you can easily lose everything.

The high volatility of memecoins means the risk of loss is high , so don't gamble with your savings, but maybe with your lunch money on some days.

Some investors use leveraged strategies to balance ultra-safe bets (e.g. BTC, ETH, SOL) with the higher risk of memecoin. This way, you can enjoy the thrill of memecoin while maintaining a solid financial foundation that is not affected by the volatility of memecoin.

Also, think of memecoin as an on-chain PvP battle — the fool theory often prevails. Always ask yourself: “Will others be willing to buy this coin at a higher price than I paid?” If you’re unsure, it might be time to take profits and avoid regrets later.

Are we riding the memecoin superbike? Who knows, but one thing is for sure: memecoins are not going away. They are fun and have the potential to have the funniest outcomes.

While we are in a bull market, enjoy the memecoin playground, but don’t risk it all in the hope of getting rich overnight. Time in the market is of the essence, so make sure you don’t ruin yourself with memecoins or leverage or both.

Invest wisely, be patient, and we will all succeed!