Is Dogecoin over? “Memecoins” – a hyper-speculative, hyper-volatile and somewhat bizarre class of cryptocurrency – are in vogue after the latest digital token posted sky-high market gains.
Pepe, a coin inspired by the anthropomorphic frog popular in Internet memes, jumped nearly 7,000% in the 17 days following its launch on April 16, reaching a market cap of $1.8 billion on May 5, according to CoinGecko data tracker.
The rise of Pepe has renewed investor interest in Memecoin, with total trading volume rising to $2.6 billion in the first week of May, up from $408,000 the previous week, according to data from Dune Analytics.
“Memocoin tends to move up from time to time, and this has historically happened when the market is mildly volatile or sideways,” said Todd Groth, head of index research at CoinDesk Indices. “It is almost as if the market is not moving fast enough and traders find these smaller coins to trade.”
In fact, the latest memecoin craze happens when bitcoin’s rally halts in 2023. The No. 1 cryptocurrency has lost 6% since mid-April to $27,416.
Pepe, which trades in fractions of a percent, is down 60% from its May 5 high, though it still has a market capitalization of about $740 million.
Its market value makes it the third largest after Dogecoin and Shiba Inu, both of which originated as Internet jokes in reference to a Japanese dog breed, with capitalizations of over $10 billion and $5 billion, respectively.
Reuters could not immediately identify Pepe’s creators, and their Twitter account did not respond to a request for comment.
Memecoins first appeared during the 2021 “Wall Street Bets” movement, driven by retail operators. They lack practical use beyond speculation, setting them apart from more “mainstream” currencies such as bitcoin and ether, which proponents say have potential as a means of payment or store of value.
Market players warn that Memecoin could bring losses to traders and investors.
“Humans love to speculate,” said Martin Leinweber, commodity strategist at MarketVector Indices. “I would be very cautious when buying them. They are pure bets.”
Pepe’s website says it was launched “to the public” without any “formal team or roadmap” and is “completely useless and for entertainment purposes only.”
According to data firm Messari, the coin is the fastest growing cryptocurrency hosted on Ethereum, the second largest blockchain.
