A simple understanding of the current trend of memecoins, due to word count, it is divided into two parts, with a breakthrough solution at the end.
This year's memecoins can be described as a fiery start in the first half and then directly dropping to freezing point in the second half. In my view, the process has three stages:
1. Capital rotation, market explosion.
As the hot spots shifted from the Solana chain to the BSC chain, coupled with the popularity of Chinese memes, the Binance series in October, the Chinese meme series, and the surrounding memes of CZ and the first sister once opened a powerful wealth creation movement. Countless people achieved a certain degree of freedom due to fast trading and daring to bet, resulting in considerable paper profits. The reason is the phased peaks of BTC and ETH, capital outflow, and market liquidity skyrocketing. Coupled with the calls from major KOLs/lead figures, retail investors' enthusiasm was greatly mobilized. Under the form of narrative + hot spots + calls, hundreds and thousands of times of coins emerged, and the retirement pensions of grandpas and grandmas surged into the meme sector. Those who rushed in quickly mocked those who rushed in slowly, and the PVP craze was initiated.
2. Capital flows within the sector, the law of the jungle takes effect.
The short-term peak of a series of memes has led to a rush of capital pouring into specific projects, which is the biggest difference from the previous rounds of dog coin festivities. Survivor bias continues to drive the concentration of retail investors' funds, with both project capital concentration and time dimension capital concentration. Coin prices peak instantly, while the information and capital advantages of major KOLs/lead figures begin to take effect. They escape the peak in time, withdraw funds, and relying on extremely low holding prices, they dump at high points, destroying the belief in holding coins. New retail investors rush to withdraw funds, stopping losses at low points. Old players, due to their experience from previous rounds of dog coin festivities, enter a feedback loop of decline → increasing positions to lower average prices → continuing to decline → increasing paper losses → low-level sideways fluctuations. A large number of memecoins lost liquidity, and there are huge amounts of trapped positions, making it impossible to initiate the next round of market. At this stage, the balance changes from a large number of paper profits → profit retracement → a large number of paper losses.
