In the cryptocurrency space, the year 2021 has brought about various trends. People were mostly talking about the world of decentralized finance (DeFi) during the first few months, but it appeared that the focus had shifted to non-fungible tokens (NFTs) by the summer. And after Mark Zuckerberg’s speech, in which he discussed the metaverse and the rebranding of Facebook to Meta, everyone began to focus on the metaverse.
Meme coins, on the other hand, was the only sector in the entire universe that managed to maintain roughly the same level of interest. These altcoins, primarily based on memes, jokes, puns, or other humorous anecdotes, have had a fantastic year. Even if they are trading at a loss compared to their all-time highs, it is safe to say that most investors and long-term hodlers have profited handsomely from these coins. Let’s take a closer look at a few of these meme coins before moving on to a more important question. How have projects like Dogecoin and Shiba Inu exploded in popularity last year?
While there is no right or wrong answer to the question above, there are a few indicators and factors that may have influenced the rise of “The Meme Coin Era.” The first of these reasons is the unexpected COVID-19 pandemic. Although there may not appear to be an obvious link between the COVID-19 pandemic and meme coins at first glance, a closer examination may reveal otherwise. Several studies have already shown that people spend significantly more time on the internet during worldwide lockdowns and quarantines. They were compelled to socialize in the online world, where they sought not only social life but also thrills and adrenaline. And it’s something that trading meme coins provide in spades.
Furthermore, in tandem with the demand for online trading, a pattern emerged that may have aided in shedding more light on Dogecoin and Shiba Inu. That is what social trading is all about. People traded in communities more than ever before during the Covid-19 pandemic. This was particularly evident during the Game Stop saga at the start of the year. Retail traders who were mostly following the subreddit r/Wallstreetbets at the time gained so much traction and attention by longing the Game Stop (GME) stock that they were able to make a few of the largest hedge funds extremely nervous. That is what Real Vision Group CEO Raoul Pal stated at the end of October:
“These new investors aren’t interested in your passion for oil, commodities, 1950s V8s, or 1990s and 2000s contemporary art.” Your Jeff Koonz is nothing more than a clumsy balloon sculpture. It isn’t a cultural reference for them. JPEGs and memes are two examples. It’s all about culture. “
Coins like Dogecoin and Shiba Inu may have benefited from a sense of belonging to a group of “fellow traders” when social interaction was limited. Retail investors from Reddit and TikTok were particularly fond of these altcoins.
None of this would have occurred if people did not have money to trade. Excessive money printing has become a cryptocurrency meme and a major issue. More than 40% of all dollars currently in circulation have been printed since the beginning of the year 2020. This is already evident in the high inflation rates that are steadily increasing worldwide.
But it was also one of the reasons why meme coins could have attracted retail investors from all over the world. Several stimulus checks to support households were also one of the reasons why, contrary to popular belief, the average disposable income per household in numerous countries such as the United States, Canada, and the G7 countries has increased in the last two years. This means that the average person has more money to spend or put into the stock market.
Meme coins gained more traction and attention and a sharp rise in price and market capitalization, thanks to a unique combination of money printing, social and community investing, and the need for thrills and adrenaline on the internet, as well as ease of investing. Dogecoin and Shiba Inu were the most popular examples.
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