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Heavily followed crypto trader Altcoin Sherpa provided a detailed analysis on whether the “meme coin super cycle” is still ongoing or if meme coins are past their peak.
What Happened: Sherpa reflected on the historical performance of meme coins like Dogecoin (CRYPTO: DOGE), which have experienced dramatic cycles of rapid gains followed by sharp retracements. He contrasted the arguments in favor and against a continuation of the meme coin trade.
Favoring Meme Coins:
Sherpa stated that people are tired of VC-backed projects with inflated valuations, preferring meme coins' higher float and more equitable distribution.
Their speculative nature make them more interesting than technology coins. "If you're looking for truly life-changing gains…buying Bitcoin (CRYPTO: BTC) or even a midcap like Avalanche (CRYPTO: AVAX) probably isn't going to make you very rich,” Sherpa states.
Lastly, meme coins’ accessibility make them attractive to retail investors. "Why ask someone to understand modular blockchains or chain abstraction when you can simply buy a picture of a dog with a hat?," Sherpa asks rhetorically.
Risks Of Meme Coins:
The biggest drawback, according to Sherpa, is that meme coins are rife with scams and rug pulls, making it risky for the average user. He also added that meme coins can still have insiders who control large chunks of the supply, which can dilute gains for regular investors.
Meme coins can also lead to fast financial losses, leaving little hope for recovery. Unlike traditional tokens, meme coins often experience swift capitulation.
Predatory games and meme coin fatigue are the remaining two cons that the trader noted. He added that projects like Pumpfun exacerbate the flow of money from retail investors to insiders quickly, harming the ecosystem.
He cautions that there is a possibility of investors shifting focus to coins offering "real value" as fatigue from meme coins grows. "Memes might not be in the super cycle because people are losing too quickly, memes are filled with insiders, and regular investors are tired/ready for regular coins."
Why It Matters: Altcoin Sherpa believes the meme coin sector will remain robust, recommending some exposure to some meme coins in a diversified portfolio. He notes that savvy traders often employ a barbell strategy, focusing on top assets like Bitcoin and Ethereum while also investing in meme coins for high returns.
Other traders have highlighted that a barbell portfolio of Bitcoin and meme coins have performed best in this bull market.
For investors seeking life-changing gains, meme coins offer potential but come with significant risks. Thus, Sherpa concludes, "True value is found in the trenches."
He suggests that if you are a whale, you can get “the easy 2x to 5x returns on Dogecoin” and can size up. He adds, "If you want to work more with midcaps, go with the other ones like Pepe (CRYPTO: PEPE)/Dogwifhat (CRYPTO: WIF)/Bonk (CRYPRO: BONK). The most obscure ones can be found on Base, Solana or other random ecosystems.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
Read Next: Struggling Meme Coins Signal Need For Change In Crypto Market
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image: Shutterstock
