Meme coins started as a joke by developers who wanted to bring their favorite memes to the crypto industry. Hence, users received these assets with skepticism and overall criticism due to the lack of use cases where meme coins were present. Despite these, cryptocurrencies inspired by memes have gained massive popularity recently, as famous figures have fueled them on social media.
Coins like Dogecoin and Shiba Inu have grown impressively in market capitalization, so the teams behind them have started to invest in these projects, building them use cases. For example, DOGE is now a useful solution for online purchases, tipping, and trading on exchanges, while SHIB is an ERC-20 token that allows exchanges on its own designed ShibaSwap.
And while meme coins are the beginning of a new era in the crypto market, they tend to be quite volatile, so let’s see how you can invest in them and navigate these risks.
Identify meme coins with lucrative potential
Despite the popularity of the underlying meme, not all meme coins will serve special purposes or become valuable on the market. Many meme coin projects flopped, while others returned after a long period of chaos, such as the never-not-funny Fartcoin.
So, due to their unpredictability, it can be difficult to assess which meme coins are useful for a longer period and which are here only for the short term. You can figure that out by checking launchpads, which support early investors’ access to new tokens, like MemePad or Pump.fun.
Identifying meme coins with potential also includes verifying social media and crypto communities, where you can engage with professional and crypto enthusiasts. Platforms like Reddit, Telegram, or Discord are usually best to start with. Of course, leveraging analytical tools is the surest way to secure and maximize the potential benefits of a meme coin.
Approach simple yet efficient trading strategies
In most cases, you can manage the risks of volatility in meme coins by using straightforward trading methods. For example, dollar-cost averaging involves investing a fixed amount of finances regularly, regardless of the coin’s price or future outlook. In the long term, this can lower the impact of volatility, so you can avoid making huge investments at the worst times.
HODLing (holding on for dear life) can also be efficient if you’re patient enough to hold the meme coin for an extended period. The asset might be prone to long-term appreciation, but this might only be available for bigger coins, such as Dogecoin, Shiba Inu, and Pepe.
Finally, setting take-profit and stop-loss orders helps optimize the potential for profit while protecting your investments. Stop-loss orders are useful in setting a price point that, once reached, will trigger an automatic system for selling the meme coin to limit losses. On the other hand, a take-profit automatically sells assets when they gain a target price, so you can earn gains before the market reverses.
Try more advanced approaches
Considering meme coins are less stable than cryptocurrencies like Bitcoin or Ethereum, you might want to use more advanced strategies and consider unique indicators. In technical analysis, you use certain signs to determine an asset’s future, such as the following:
- Moving Averages (Mas) help identify future trends based on the average price of recent prices within a timeframe;
- The relative strength index (RSI) measures the speed at which prices move on a scale between 0 and 100;
- Fibonacci retracement levels can showcase when support and resistance levels appear during a price reverse;
You could also utilize automated trading bots, mostly those with advanced AI-driven agents that gather real-time data and detect patterns in prices that are difficult to reach with other tools. These bots not only automatically execute trades but are also emotion-free, so they base their decisions on facts instead of FOMO (fear of missing out), which traders are prone to.
Are meme coins that valuable?
Many wonder if meme coins are truly so valuable that it is worth risking investing in them, especially for the short term. Traders might be used to fast changes in opening and closing trades, so this could apply to meme coins as well. However, they must be careful since price movements in meme coins are much more unexpected than in any other cryptocurrency.
For example, in 2024, the price of Dogecoin went through the roof only following speculations of Elon Musk introducing digital payments to the X platform. This is not the only time the cryptocurrency has been affected by tweets on social media―it has experienced massive surges several times in the past. In some cases, it jumped to more than 30% of its value, while in other cases, it was up by a whopping 236%.
In such cases, some traders prefer to sell their coins at high prices and buy them back when prices are much lower. Others prefer to set a stop-loss at 50% to return the investment.
Will meme coins continue to be fun?
The main purpose of meme coins is to make people smile and remind users of the memes that brought communities together during the best era of the internet. However, meme coins are starting to gain value as a way to remain relevant on the market for more than a few months.
So, we have already seen some of our favorite meme projects become interested in real-use cases by investing in the underlying architecture. For example, Shiba Inu is useful for:
- Governments, by supporting identity management, national economies, and scalable technology;
- Businesses, by ensuring secure payments, blockchain integration, and metaverse tools;
- Individuals, by allowing people to control their data, earn and engage within the community;
Like Shiba Inu, other meme coins value real use cases and technologies that will shape the future of Web3.
Are you trading meme coins?
Meme coins started as a joke among the crypto community, where developers would take a meme design and turn it into a token. The Doge dog meme was so famous that even its cryptocurrency became the leading asset by market capitalization within the meme space, so its value went through the roof in no time. Other meme coins followed, and traders are now approaching various strategies to earn rewards by trading them for the long term, such as dollar-cost averaging.