The price of Shib soared at the end of October because of a rumor.
The source came from a website called CoinMomo, which reported that Robinhood would list Shib on October 25. Seeking profit from the claimed Shib listing on such a major trading platform, crypto investors flocked to buy Shib, leading to price surges. It turned out that the listing did not happen on October 25. However, the strange thing is that the Shib price did not plummet due to this misinformation. Instead, it soared to $0.00008778 on October 28, according to CoinMarketCap. That day, Shib’s market cap exceeded $50 billion at its height. As of November 2, the figure remained at $39 billion, which is still higher than Doge’s market cap.
It is surprising that this meme token created for a little over a year outstripped Doge, which is a well-established cryptocurrency that has been around for 8 years. Plus, Shib is also a copycat cryptocurrency of Doge. Everyone is shocked that the marketing joke that Shib is the “Doge Killer” now has come true.
Thanks to the Shib boom, other meme tokens, such as Yooshi, Babydoge, Elon, Cate, and Hoge, have all been made popular, with token prices growing by 100% to 560%.
As a result, the market cap of the entire meme segment has soared to $84 billion, according to CoinGecko.
This kind of growth has been mind-blowing to many long-term and research-focused investors. What is the story behind meme tokens? How did they achieve such substantial growth?
Meme tokens are a type of culture-based cryptocurrency. Some take meme tokens as copycat coins, but more people believe that the term is simply a reference to “animal coins”. The concept of meme tokens started with Doge. In 2013, the price of the once worthless Bitcoin soared to double digits (US dollar), which kicked off a speculation boom. Jackson Palmer created Doge directly based on Bitcoin’s code as a mockery, which was intended as a programmer’s joke. Doge was very casual and even adopted a meme as its icon. Against such a background, many meme tokens serve as jokes in our social culture.
Crypto investors hold different views on the price surge of meme tokens:
1) Meme tokens embrace community-based cultures favored by the young
Nowadays, most young people are netheads. For them, memes are a great social lubricant that can be used as cute pictures, ridicules, or jokes. Plus, memes spread easily. Meme tokens are a perfect match for such preferences. In fact, the spread of memes and tipping with meme tokens are both social behaviors. In this sense, memes and meme tokens are nothing different from universal social tools decades ago like cigarettes and alcohol.
2) Meme tokens rely on celebrity effects
Previously, Doge was the only successful meme token. A major driver of meme tokens’ price surge over the past 12 months was the promotion of Doge by Tesla’s CEO Elon Musk. After the Doge price soared, he also implicitly recommended Shib to crypto investors, which made it more popular than ever before.
3) The extremely low prices of meme tokens lead to increased FOMO (Fear of Missing Out)
A major characteristic of meme tokens is their massive, cheap supply. On one hand, crypto investors can purchase a huge number of meme tokens with a few bucks. On the other hand, these tokens are fully used in social interactions — Crypto users are happy to tip with meme tokens because they don’t worth much. More importantly, if total copycat meme tokens like Shib can thrive relying on market popularity, why can’t other animal coins do the same? Driven by strong FOMO, many investors can’t resist the temptation to buy some just in case.
Another thing is that: Meme tokens seem to have achieved “decentralization” and “effective circulation” in a different way.
The biggest reason why cryptocurrencies are popular with investors is that they managed to eliminate authorities and become decentralized. In the early days, the mining-based Bitcoin supply was regarded as the best way to achieve decentralization. However, over time, mining proved to be less decentralized than people expected. As its difficulty and threshold go up, mining has become increasingly centralized. Additionally, due to the high transaction fees, most investors prefer to hoard the expensive cryptocurrencies rather than spend them. In contrast, meme tokens with a massive, cheap supply have encouraged more frequent trading.
Despite all these reasons, it is undeniable that the price surge of meme tokens also relies on one major factor — marketing and speculation. Most holders of such tokens no longer recognize the social or community culture. Instead, they are speculators who are only after the huge profits meme tokens may bring them.
In addition, upon closer observation, we can tell that all these soaring meme tokens are associated with whales who play the role of “market makers”. However, this is harmless. In the crypto community, which is full of speculators and “market makers”, it is by no means easy for such a copycat token that started from scratch to rise to prominence. Moreover, in the current crypto market, attracting whales as “market makers” is nothing to be ashamed of. On the contrary, it is seen as a sign that the token price may rise and the token could boom.
On the other hand, the crypto fame and growth obtained by meme tokens relying on speculation and price marketing alone has also poured ridicule on cryptocurrencies that have devoted great efforts to exploring values, technologies, and applications.
