I. Understanding Memecoins
Last updated
Last updated
The primary distinction between Memecoins and DeFi or VC-backed Tokens lies in their driving forces. Memecoins are not propelled by a project’s intrinsic value but are influenced by four dynamic factors: meme themes, market sentiment, retail FOMO, and pump-and-dump schemes.
Specifically, in the Memecoins:
Meme Themes/Topics: The Memecoin determines its theme and topic.
Retail FOMO: Drives the short-term cohesion of the Meme consensus.
Pump-and-dump schemes & Overall Market Sentiment: Influence the market cap’s height.
For users, selecting the GEM Coin is the most crucial skill and the core ability of a Meme trader. Due to these characteristics, Memecoins are highly susceptible to extreme volatility. A single tweet from a KOL (Key Opinion Leader) or a significant holder dumping can instantly reverse the market’s direction. Any Memecoin with a market cap between $500K and $1M can experience a 10x pump within minutes or drop over 50% in seconds.
Therefore, trade timing is also incredibly important. Especially in one-sided markets, it’s easy to either ride a pump or suffer a crash immediately after buying. These two abilities—choosing the right Coin and timing your entry—require a massive investment, particularly for hardcore traders. They spend countless hours monitoring the market, surfing through dozens of trader groups on platforms like X and Telegram, and are well-versed in the origins and potential breakout points of various Memecoins. These users often have rich trading experience and their own strategies.
Some hardcore Meme trader describe Meme trading as a PVP game, highlighting its difficulty and harshness. Consequently, they are highly sensitive to tools and technology because, in a PVP game, everyone wants the most advanced gear and a deep understanding of opponents’ strategies. For hardcore traders, smart money acts as a benchmark player in the arena—a reference for buy and sell signals. By observing these verified quality addresses, they analyze these benchmark traders’ strategies and form their own judgments.
On the other hand, regular trader or beginner face three main pain points in the Memecoins:
Not knowing how to choose Memecoins
Not knowing when to buy or sell
Not knowing how to handle rapidly shifting markets
Regular users and beginners cannot possibly invest the same amount of time into Memecoins. Copying smart money—selecting the right smart money and steadily following their trades—is the way to go. By copying what smart money buys and sells, users don’t have to stress over countless Memecoins or rely on subjective judgments to miss the right rhythm. This approach allows them to enter the market more quickly and, in the process, gradually develop a sensitivity and understanding of Memecoins.
