Meme coins entered the hearts and minds of crypto traders with the introduction of Dogecoin (DOGE), which began as a joke in 2013. Today, $DOGE ranks in the top 20 of all cryptocurrencies and continues to be a favorite meme token among traders. In this article, we break down what meme coins are, what the risks are, and how to use Quadency trading bots to reduce your risk exposure.
- Meme coins ride the momentum of a meme
- They usually have high supply and low liquidity
- Traders use meme coins for speculation and accumulating
- Use trading bots to optimize your meme coin strategy
What are Meme Coins?
A meme coin is a type of cryptocurrency that exists only to be traded and speculated on, as it generally has no use cases or any type of business model behind it. The idea or story behind the meme coin is what (hopefully) will appeal to the social media masses, as social attention is essentially a meme coin’s only avenue for adoption.
- Meme coins are created and designed to go viral and be shared, sometimes resulting in a large “army” or following.
- If the coin can gain a large group of followers and get a lot of social attention, it could become attractive to the wider crypto trader community.
Key Features of Meme Coins
Besides not having a business model, a very low price is one of the things meme coins have in common. It’s also one of the reasons meme coins have become so popular, as almost anyone can afford a large bag of meme tokens. Other common features include:
- Large, sometimes unlimited token supply
- Little if any token utility (but that may be changing)
- Team behind it is usually anonymous (but not DOGE’s)
- Meme prices often experience high volatility
- Most are low market cap coins (except DOGE and SHIB)
- Value is primarily determined by how viral the Meme behind it becomes
How Traders use Meme Coins
Crypto traders primarily speculate on meme coins, but others enjoy the community effects of the meme or like to accumulate to grow their bag.
To be a part of something
People like to get behind a story, especially if it’s one that resonates with them. The Shiba Inu meme coin community fundraises for rescue Shina Inu dogs, adding a real-life element to the meme’s story and creating a way for people to connect with each other.
Some traders like to accumulate meme coins over time to grow their bag holdings. Many can appreciate the low entry prices and hope they can choose a meme coin that either goes viral or simply rides the momentum of other cryptocurrencies and meme coins.
Volatility and risks
- High volatility is a feature of meme coins and generally momentum swings purely by social sentiment.
- Generally, there is no business model, or use cases behind a meme coin (however Shiba Inu has tried to add utility to try and beef up their long-term viability.)
- With anonymous teams, it can be hard to determine if a project will survive bumps in the road.
- Pumps & Dumps are always something to watch out for with meme coins, particularly with the many low cap coins.
Dogecoin and Shiba Inu differ from most meme coins because they both have competitive market caps in relation to crypto majors, and thus a higher level of liquidity than most meme coins. They also are connected with high-profile influencers (Elon Musk with DOGE, Vitalik Buterin with SHIB). In these cases, there’s the added possibility that they could mention the coin in a post that could go viral.
It’s inevitable pic.twitter.com/eBKnQm6QyF— Elon Musk (@elonmusk) July 18, 2020
Level up your meme coin knowledge with our Coin Profile on Shiba Inu
Crypto traders can follow these tips to build layers of safety around their meme coin trading:
- Verify that the coin’s liquidity pools are tied to burn addresses to make sure liquidity is locked and can’t be rug pulled.
- Check if any audits on the token contract have been performed and review the results.
- Automate your meme coin trades to find potentially profitable times to trade (see the next section!)
Popular Trading Bots for Meme Coins
Many traders view volatility as an opportunity and know that automated trading strategies can work well for meme coins as well as other cryptocurrencies. Quadency’s bot strategies give traders premium tools and indicators that help them manage their meme coin trades.
Smart Order Bot
Investors can set up stop losses and take profits for meme coin trades using Quadency’s Smart Order, protecting their capital and controlling their buys and sells by setting a few simple parameters.
Grid Trader Bot
Quadency’s Grid Trader bot can help traders make the most of meme coin volatility by enabling them to set up multiple buy and sell limit orders on grid lines defined by a specified price range. When the price moves within the range, profit is realized through each buy low/sell high cycle.
If you want to build some meme coin bags, Quadency’s Accumulator Bot helps you Dollar Cost Average (DCA) by making automated regular buys from every minute to every month and beyond. Traders can also put a limit on the price, giving you additional control in the case a meme coin suddenly spikes or falls.
Premium bot automations are just a few clicks away at Quadency! Get Started.
How to find the newest Meme coins
If you’re just hearing about a meme coin, it likely has already been pumped and that’s why you’re hearing of it. If you buy in, you might just be buying the downside. Here are a few tips for finding meme coins on the rise:
- Look at the new cryptocurrencies tab in CoinGecko, it's easy to spot memes in the coin logos and you can DYOR from there. You can also sort the new coins by volume, chain, and price.
- Use technical indicators and the free backtest function in Quadency's dashboard to get an idea of where a meme coin has been and where it might be going.
- If a new meme coin is in an early cycle during a general crypto market pump, it may pump along with the markets.
- Monitor the hype around meme coins on social media, but don't follow the hype - manage it with Quadency trading bots!
Always remember that meme coins should be treated with extra caution due to their extremely high volatility and oftentimes very low liquidity.
Proper dumbass degen move but I'm throwing a few hundred dollars at almost every random #memecoin I see in case it pulls a $SHIB next bull run.— Lady of Crypto (@LadyofCrypto1) July 28, 2022
This is pure gambling and I will probably lose it all. Don't do this with money you cannot afford to lose or don't do it at all 🤣
Meme coins added another dynamic layer to the crypto trading experience. With a bit of DYOR and a smart terminal like Quadency, all your meme coin and crypto asset trading is optimized and managed in one portfolio view.
- A unified crypto portfolio with premium trading bots. Try Quadency today.
- Read Quadency’s Crypto Quarterly Report
- Discover QUAD tokens and start staking!
Quadency is a cryptocurrency portfolio management platform that aggregates digital asset exchanges into one easy-to-use interface for traders and investors of all skill levels. Users access simplified automated bot strategies and a 360 portfolio view with a free account.
Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.