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Trader's Guide to Meme Coins

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.

Quick Summary




  • 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
Key_Features_of_Meme_CoinsCommon Characteristics of Crypto Meme Coins

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.

Speculation
The lifetime ROIs of DOGE and Shiba Inu are +11715.34% and +703038.1%, respectively. So naturally, meme coins are attractive, despite their propensity for high volatility and risks.

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.

Accumulate
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.