It finally happened, cryptocurrency has its first six-figure token and a milestone once thought unfathomable has just been reached, providing perhaps the greatest signal of the bull run to come.
In the early hours of 5th December 2024, Bitcoin reached over $100,000, peaking at over $103,500 before falling back into the high $90,000 range.
It is a big moment, one that arrived just before the first cryptocurrency reached its 16th birthday, and has led to something of a rising tide reminiscent of the bull runs of 2017 and 2021, with many people loading up their crypto cards and looking for tokens they can invest in that could provide similar profits.
The only problem with this approach is that whilst there are plenty of tokens out there that are worth your time and money, there are also a lot of meme coins out there and reasons to follow the Ancient Roman advice of caveat emptor: let the buyer beware.
Whilst we are all going to make it, not all tokens will, and in order to have a good time with crypto you need to know how to sort the wheat from the chaff.
To do that, we will explore meme coins as a whole and one particular recent example to show some potential signs of strength and weakness with a token.
What Is A Meme Coin?
A meme coin is similar in concept to a meme stock amongst retail investors, both in terms of their appeal and their behaviour.
Meme stocks and meme coins are exceptionally volatile, acting like penny stocks in terms of their fluctuating market value. This is in spite of them often having valuations significantly higher than the $5 cap the Securities and Exchange Commission traditionally placed on penny stocks.
The key difference between a meme coin and other tokens (and indeed a lot of meme stocks) is purpose; whilst most tokens are minted with a specific goal, utility or value in mind, such as stablecoins acting as representations of assets or governance tokens providing voting power, meme coins tends to have nominal or no purpose whatsoever.
Often they form part of so-called “rug pull” or “pump-and-dump” schemes, where their value is inflated, only to dramatically fall in value once the early pre-sale investors pull their money out, perhaps most infamously seen with Squid Coin.
Not every silly token is inherently not to be trusted, and certain tokens such as Dogecoin have even managed to generate returns, but that volatility is something to be wary of, particularly as the market reaches another set of new heights.
Spit On That Valuation
Hailey Welch, a 22-year-old influencer from Tennessee, became famous overnight for a rather infamous viral video, where in response to a rather lewd question she made a loud onomatopoeic spitting sound and spat her way to internet fame.
As well as using a spit sound to get fame in a way not seen since Bob Carolgees and Spit the Dog, Ms Welch launched a merchandise store and a podcast all in the span of around six months, cramming as much into those 15 minutes of fame as she could.
This included a meme coin, HAWK, based on the Solana blockchain, which launched on 4th December 2024, reaching a market cap eight of $490m before plummeting 20 minutes later, amidst considerable controversy.
The ostensive aim of HAWK according to Ms Welch herself was to counter other scammers who had used her internet infamy as inspiration for a meme coin by having one that was officially endorsed, but it has led to accusations that she orchestrated a rug pull, similar to other creator-endorsed tokens.
One user on Twitter went so far as to claim that he lost $33,000 on the token in ten minutes, leading to a response that quickly became infamous: “I am a huge fan of Hawk Tuah but you took my life savings.”
One can only hope this person is joking (and it does appear to be an elaborate parody), but the golden rule of investing is to never invest what you cannot afford to lose. This goes tenfold for anything as volatile as a meme coin.
As well as this, try to avoid trading during particularly volatile periods. This is sometimes unavoidable, but if a token has only just come into being, already has a high valuation and does not appear to have any moments of relative stability, it is best to stay away.
By the time meme coins hit the open market with a huge valuation, the buyer should be very much beware that the only way is down.