Memecoins such as Dogecoin, Shiba Inu, Tamadoge, Baby Doge Coin, etc., have become very popular in 2021 and have inspired hundreds more. The reason was simple – meme coins generate higher returns than other cryptos. For example, the value of Dogecoin has increased by more than 670% in the last 5 years, while that of Bitcoin has increased by about 116%.
It is important to remember that these are just historical performances and do not reflect the future. If you’re wondering if you should buy meme coins in 2023, here are 3 things to consider.
Although the entire cryptocurrency market is volatile, meme coins are particularly volatile and prone to sudden price changes. It is because they are usually owned by particular whales that can impact tokens in one fell swoop. For example, the crypto analytics platform IntoTheBlock noted that the enormous DOGE whale held more than 30% of the total supply in circulation.
With such centralization, meme coins become highly volatile, and some died when a whale suddenly liquidated its position, which is unlikely for popular utility tokens.
Dogecoin and Shiba Inu remain the meme coins least likely to be manipulated.
High reward, high risk!
In general, the riskier an investment is, the higher the return. It is why bonds in developing economies have higher potential yields than developed ones. The same goes for cryptocurrencies, as meme coins are riskier than top-tier cryptocurrencies, hence the high potential rewards.
The problem is that many are scams or fraud attempts aimed at defrauding investors without creating natural products. Anyone can create a cryptocurrency, and some evil actors launch meme coins simply to attract investors by promising them big profits quickly.
Whether it brings any utility to the community must be determined in any cryptocurrency project. Dogecoin has become popular because it is a recognized payment method by many online merchants, including Tesla.
In addition, other meme coins have utilities in the metaverse or a P2E gaming ecosystem.
Tamadoge is an example of this with its TAMA token.
Thus, it would help if you evaluated whether a meme coin project provides any utility, as this is the only thing that can sustain it in the long run.