Q1 2024: Why the meme coin market will dominate — The perfect blend of cultural phenomena and speculative psychology

Written by: Lingyun, Miss Cat
Reviewed by: Ashley

Analyzing the Explosive Growth of Meme Coins from a Historical Perspective

Meme coins themselves are not an outdated concept. In 2013, software engineers Billy Marcus and Jackson Palmer created Dogecoin (DOGE), inspired by the Japanese Shiba Inu “Doge.” No one predicted at that time that, over ten years later, it would become one of the most profitable asset classes in the crypto market.

As the latest CoinGecko report indicates, in the first quarter of this year alone, the average return rate of meme coins reached 1,312.6%, far surpassing RWA and AI-related tokens. Meme coins such as Book of Meme (BOME), Brett, and Cat in a Dogs World (MEW), which listed in March, rapidly rose to the top 10 market cap rankings, overturning the traditional emphasis on “utility” in crypto assets.

This signifies that meme coins are no longer just speculative bubbles but have established a firm position as key players in the market.

The Essence of Meme Culture — Why Does It Spread?

In 1976, British biologist Richard Dawkins proposed the concept of “meme” in his book The Selfish Gene. It refers to the smallest unit of cultural information that is replicated and transmitted, similar to genes. Translated as “mimetic” by Chinese researchers in 2003, this concept encompasses all cultural phenomena such as religion, news, rumors, slogans, and jokes.

Three factors determine the propagation power of a meme:

1. Persistence (dependent on the lifespan of the carrier)
2. Reproductive ability (how many people can understand and share it)
3. Copy fidelity (how well the original form is maintained)

The second and third are particularly important. The more widely a meme spreads, the higher its chances of survival. However, perfect replication is difficult and varies based on the recipient’s educational background, age, and gender. Often, propagators consciously combine new perspectives or other memes to transform and make them more appealing.

The same principle applies to the meme coin market. Visual and emotional symbols like the cute dog image (DOGE), the sad frog joke (PEPE), or the sloth character spread rapidly as they are understood and empathized with by more people.

The Environment Where Meme Coins Became Winners in Q1 2024

Macroeconomic Downturn and Changes in Public Sentiment

The current bull market attracts many new entrants to the crypto space, but they are losing interest in complex technologies (smart contracts, oracles, staking). Meanwhile, amid overall economic fatigue, people unconsciously choose “low-energy, high-yield” actions.

Meme coins precisely meet this demand. You can buy thousands of units for just $10, and a single zero reduction yields a tenfold return. No need for complex technical understanding. This low psychological barrier is driving massive capital inflows.

Utilizing Information Propagation Models

Applying the epidemiological SIR model, the key to information spread is that “infection speed exceeds recovery speed.” In other words, the more new entrants encounter the information, the more the spread grows exponentially.

For meme coins, large social platforms like Reddit, Twitter, and TikTok serve as “infection mediums.” When an influencer makes a statement, it can reach tens of thousands simultaneously and then be propagated further by those individuals.

The Power of Visual Simplicity

“Every time a formula to evaluate ‘Three-Body’ increases, the audience decreases by 10,000” — this is a universal law of information dissemination. Similarly, meme coins are more likely to spread if they are “simple, cute, and easy to understand.” Explaining complex economic models appeals only to experts, but visuals like “adorable Shiba Inu” or “sad frog” evoke empathy across age and gender groups.

Influencers and Communities — Creating the Myth of Wealth

The rapid growth of meme coins heavily relies on influencers’ promotion and community power. They do not just claim “this coin will rise,” but build myths of wealth, such as “someone made $30 million in 2 hours.”

FOMO (Fear of Missing Out) psychology explodes here. When many people see the same community recommending the same coin simultaneously, they are more likely to be brainwashed into thinking “this has special value.” In reality, risks like trading bots, selling at the top, or zeroing out are lurking.

A crucial insight is to pay attention to information from English-speaking or global influencers, as cross-cultural consensus is the true market sentiment.

The Evolution of Meme Coins — Fusion with NFTs and DeFi

Integration with NFTs

Shiba Inu Coin (SHIB) exemplifies this evolution. SHIB token holders can acquire limited edition NFTs called “Shiboshis” (10,000 Shiba Inu-inspired animated characters) and use them in games to earn coins. Early NFT projects like Rare Pepes and Fake Rares also evolved from internet viral memes.

NFT collectors form private communities, gaining access to exclusive offline events and related merchandise. This elevates meme coins from mere speculation to a “fan community.”

Integration with DeFi Protocols

Meme coins have incorporated DeFi mechanisms such as staking, liquidity provision, and mining. For example, on the Shiba Swap platform, SHIB holders can stake tokens for rewards and earn additional tokens like BONE and LEASH. Doggy DAO, as a decentralized autonomous organization, offers voting rights to participate in protocol decisions.

Liquidity providers earn a portion of trading fees, supporting the liquidity and efficiency of the meme coin market.

Risks Investors Should Know When Entering Meme Coins

1. Extreme Volatility

Meme coins can increase in value tenfold within minutes and then drop 90% the next hour. Market movements are triggered instantly by statements from celebrities (e.g., Elon Musk), trending news, or internet memes. Individual investors face severe losses.

2. Lack of Technological Foundations

Many meme coins lack real use cases or innovative technology. Their value depends entirely on market sentiment, which can turn on a dime, turning their value into a castle in the air. Even projects integrating NFTs and DeFi are mostly centered on “humor and satire.”

3. Market Manipulation

Spreading false information, community splits, and deliberate pump-and-dump schemes are common. Meme coins with low liquidity are easily manipulated by large funds with small amounts, causing unwary investors to buy at high prices and suffer losses.

4. Prevalence of Scam Projects

Many meme coins are launched by anonymous or pseudonymous developers. After reaching the pre-sale target, the development team often disappears with the funds (“rug pulls”). Unauthorized changes to pre-sale addresses via account hacking are also serious risks.

Conclusion — Investment Judgments in the Meme Coin Era

In Q1 2024, meme coins have risen from mere speculative assets to dominant forces in the crypto market. This is the result of the perfect fusion of meme as a cultural phenomenon, propagation laws, psychological FOMO, and viral social media mechanisms.

However, this market is also filled with scams, manipulation, and extreme volatility. When participating, keep in mind:

• Confirm cross-cultural consensus among global influencers
• Verify information from multiple sources, not just one community’s recommendation
• Objectively evaluate technological foundations and use cases
• Start with small positions within your surplus funds

As meme coins now occupy the market’s center, balancing understanding and caution is essential for investors’ survival strategies.

【Disclaimer】Markets carry risks, and investment requires caution. This article does not constitute investment advice. Users should consider whether the views expressed align with their own situation and make investment decisions at their own risk.