In recent years, the cryptocurrency market has seen the rise of a new phenomenon known as meme coins. These digital currencies, inspired by internet memes and social media trends, have gained immense popularity among traders and investors. However, due to their volatile nature and lack of regulation, it is crucial to understand what meme coins are and how to trade them safely. In this blog post, we will explore the concept of meme coins, discuss their potential risks and benefits, provide essential tips for safe trading, and avoid scams.
What is exactly a meme coin?
Popular memes on the Internet often inspire meme coins; these projects are created with the purpose of humor and jokes, so therefore, they are somewhat unserious.
Everyone is familiar with Dogecoin, a well-known early meme coin. This project originally intended to “copy” Bitcoin using the Shiba dog as its logo. As a result of Elon Musk’s continual promotion of Dogecoin, several new meme currencies such as Shiba Inu, Pepe, LADYS, and Bob have been created.
However, not every meme coin project enjoys the same level of popularity and CEX listing as Dogecoin and Shiba Inu. Many meme currencies are designed solely as scams or money grabs in the current market.
Meme coins are always highly volatile and much riskier than other projects. But why do so many guys still want to invest?
Potential And Risks Of Meme Coin
The community still adores meme coins, especially those looking to “get rich quick,” despite the high stakes and potential rug pull. Meme coins can rise by tens or even hundreds of percent in a relatively short period, which is why they are always in demand. These initiatives can provide significant gains in a short period but come with enormous risks; there is a high likelihood that you will lose money.
If you invest in meme coins for long-term purposes, it is best to abandon the idea. Of course, there are still some recognized meme coin projects that you can hold for a long time (like Dogecoin and Shiba Inu), but ideally, meme coin investments should only be short-term – hit fast and withdraw quickly.
Why are meme coins so popular?
The popularity of meme coins can be attributed to various factors. Firstly, they tap into the power of viral internet culture and capitalize on trends that capture the attention of millions of people worldwide. This element of novelty makes them appealing to traders who want to be part of the latest trend.
Secondly, meme coins often have low entry barriers compared to established cryptocurrencies. This means that even individuals with limited investment capital can participate in trading meme coins.
Lastly, many meme coins offer unique features or incentives that attract users. For example, some meme coins incorporate mechanisms that reward holders with additional tokens based on their existing holdings.
So how can you trade meme coins safely and avoid scams?
Finding a promising project amidst a sea of scam meme projects is not easy, but there are ways to limit risks and filter out the most potential projects. When trading meme coins, avoiding using your main wallet or investing all your capital at once is crucial.
Guys who trade meme coins must be careful not to use their main wallet and not “all in,” only trade with a small capital (can lose).
Here are some things you should remember when investing in meme coins
- Only use secondary wallets to trade meme coins
- No long-term investment, no greed
- Check the audit contract before trading.
- Revoke tokens immediately after completing the transaction
- Beware of natural airdropped tokens; it is best not to accept them if the contract has not been tested.
When investing in meme coins, you should
- See the factors that can help increase the price for meme coins (e.g., community). Community is the most important factor for a meme coin project, and the large community can help drive prices up rapidly, creating a FOMO that sucks up cash flow.
- Using data analytics platforms like DEXTools… To see new meme coin projects, projects that are being interested, from which to filter out the best ones for yourself
- Check the project’s interest and mentions on Twitter, Facebook, Telegram, Discord, Twitter Trends, Google Trends, DexTools, or CoinGecko. It is possible to use LunarCrush to test
- Check out the project’s Twitter account through Tweetscout, which is quite a helpful tool for checking how active and engaged a Twitter account is. Through this tool, you can also see a list of which community most follows crypto KOLs.
How to hunt for the earliest potential projects
The key to trading meme coins is to find the project at the earliest when the capitalization is low and few people know, not on CEX much.
One bot on Telegram you should use is “iToken.” IToken is a bot aggregating new tokens, displaying information about tokens, such as an address, total supply, liquidity, and contract…
In addition, you use DEXTools to watch newly launched meme coins. Often new coin memes are present here. This platform constantly updates hot tokens and meme projects that are most interesting.
Like DEXTools, Dexscreener is also a platform that meme hunters should watch.
For gem hunting, Blockchaincenter is a tool you should keep an eye on. This tool aggregates and analyzes the projects that are most interesting in the cryptocurrency community right now.
In addition to Ethereum (high gas fees, slow network), you can choose other potential chains to hunt memes, such as zkSync, Arbitrum, Sui, and Aptos. Recently, meme coins on BRC-20 are also very active, but the fees here are quite high.
To avoid falling victim to phishing projects:
When you find a meme project you want to invest in, you should first check the contract.
There are 3 tools you should use:
This check is essential to minimize risks to a new meme project, such as rug-pulls, crypto honeypots, etc.
Shark wallet tracking
If you like to invest with sharks, you can use DUNE, Nansen, or Debank, to find shark wallets that hold meme coins from which to invest but selectively.
We recommend you learn and make your own decisions instead of investing in others.
Future of Meme coin
Many individuals still have preconceived notions about meme currencies and believe that all of them are scams. However, history has demonstrated that anything may happen in this market, including major projects (the LUNA collapse is one example).
Meme coins are unquestionably essential to the cryptocurrency market’s future because they are currently a part of the large crypto ecosystem. Meme coins are harmful as long as cryptocurrencies continue to develop.
Conclusion
As long as you keep in mind that “high returns always come with great risks,” you could consider investing in this channel if you have a more open opinion about meme coins. Additionally, unlike other projects, meme coin has a very high rate of scams; therefore, you must always be extremely picky when investing.
