Meme coins are a cryptocurrency often created as a joke and thrive almost purely on hype. They are usually based on popular internet memes with little to no real-world use.
The topic of today's post is on PepeCoin, which recently surged more than 2100% and, in the last 24 hours, achieved a trading volume of more than 190 million USDT.
Investing in meme coins can be exciting, knowing that market prices for meme coins can be pushed to euphoric highs despite general scepticism. The price of PepeCoin rocketed more than 700% over the last two weeks, pushing the new cryptocurrency to a $1 billion market capitalization.
Early investors in Pepecoin have made staggering profits, opening the door to greater speculation and with starry-eyed retail investors pumping in more capital.
This could end up as a trap for late investors who, later in hindsight, find out that they have bought in at the peak of the hype cycle. Unlike early investors who have made staggering profits, late investors tend to lose their money when the bubble bursts.
This happened to many investors who bought SafeMoon, a popular meme coin launched in March 2021 and reached an all-time high in April 2021. Since then, SafeMoon has lost over 99% of its value, leaving many investors in the red.
The Exit Liquidity:
This means that people who buy into meme coins like PepeCoin may end up as exit liquidity - they lose money when the top holders sell their coins for a profit.
An anonymous Pepecoin whale bought 962.3 billion PEPE for an average price of $0.000003122 and took a paper loss of about $540,000 in two days as the token plunged over 30%.
The whale bought the tokens on Friday, May 5, when PEPE reached an all-time high of $0.0000045 after being listed on Binance.
The rally crumbled when the price dropped sharply on Saturday and Sunday, as some early investors booked profits, reducing the whale's investment into exit liquidity for themselves. The whale's PEPE stash was worth about $2.46 million on Friday but only about $1.92 million on Sunday.
Investors must exercise caution and thoroughly research the token and its potential risks before buying in or risk becoming exit liquidity for someone else.
Or, in the case of meme coins, recognize that they are essentially gambling and manage the risks taken and expectations.
RISK DISCLOSURE: ⚠️
Digital payment token investments, such as cryptocurrencies, are not guaranteed by service providers or cryptocurrency exchanges and the government. It is crucial to exercise caution in investing, including the awareness that a part or all of the capital may be lost and may not be recovered, especially in cases of high price volatility or down market, bankruptcy, seizures and other factors. Hence, the user’s risk tolerance, investment appetite or capacity for loss should be set firstly, and they should observe safe and knowledgeable investment practices accordingly. For more information, please visit MAS' website.
IMPORTANT NOTE: 📢
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