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Over the past weekend, there was a notable rise in memecoin prices, driven by increased social buzz and increased risk appetite among cryptocurrency investors. The concept of a “memecoin supercycle,” which posits that memecoins will lead the next cryptocurrency bull run, gained traction on x. Against this backdrop, crypto analyst Kai (@Kaiwen0x) published a widely shared report. x.com/Kaiwen0x/status/1842369109763518507″ target=”_blank” rel=”nofollow”>article explaining the continued appeal of memecoins as a viable investment option.
The case of Memecoins in the crypto Bull Run 2025
Kai argues that memecoins are poised to outperform the market by 2025, suggesting that owning a “select basket of memecoins” could allow investors to outperform 99% of market participants. “Aside from bitcoin and stablecoins, memecoin is the only category that has found a clear product-market fit. “They combine the best features of an ICO (capital formation) and an nft (community building) to offer an excellent product: global and permissionless speculation,” he says.
The analyst emphasizes that traditional crypto projects often juggle product development and token management, while memecoins focus solely on the token itself. “Memecoins eliminated the product and made the token its entire business, deriving the value of the token from the attention generated by its community,” explains Kai. Citing data from crypto analyst @MustStopMurad, Kai notes that in 2024, 16 of the top 20 tokens within the top 300 that surpassed bitcoin were memecoins.
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Kai identifies two main external factors that are crucial to the rise of memecoins. First, macro liquidity and interest rates must be favorable for the entire market: “The macro setup points to higher liquidity and lower interest rates in the next 12 months. “Memecoins act as a leveraged beta version of bitcoin, allowing you to capture maximum profit in a risk environment,” explains Kai.
Secondly, the analyst refers to financial nihilism, a term popularized by Ikigai Investment CEO Travis Kling (@Travis_Kling). This theory suggests that a rise in financial nihilism and the “YOLO” mentality is attracting more participants to speculative markets.
Internally, memecoins have shown that they have a clear product-market fit and benefit from what is known as the Lindy effect, where the future life expectancy of some technologies or ideas is proportional to their current age, suggesting that memecoins are here to stay. Additionally, memecoins are particularly adept at creating and maintaining compelling narratives, a critical aspect in a market driven by speculation and investor sentiment.
The Art of Memecoin Selection
Kai delves into strategies for selecting promising memecoins, emphasizing the importance of nuanced analysis:
Emotional Resonance: “I look for memes that generate a strong emotional reaction. Is it fun, relatable, catchy, powerful or memorable? The average retail investor will be the last marginal bidder for our magic internet currencies, so there is a need to buy and hold what they resonate with emotionally,” explains Kai.
- Ticker Simplicity: Favor simple, powerful tickers, ideally 3 to 5 letters, such as WIF, GIGA, and BULL.
- Incumbent Growth – Tracking consistent growth in the number of incumbents as an indicator of increasing adoption.
- Wide distribution of tokens: Prefer coins with a wide distribution to avoid centralization risks.
- Drawdown Resilience: Identify coins that have survived multiple significant price drops and recovered, indicating strong community support.
- Active Community Engagement: An “active army of people responding and interacting on x” is sought, indicating a vibrant and engaged community.
- Exchange Listings: Please note that centralized exchange (CEX) listing announcements can significantly impact a token's valuation.
- No insider trading: Be wary of coins with insider involvement, such as pre-sales or venture capital backing, which can lead to uneven playing fields.
Potential risks and invalidation scenarios
Kai recognizes the risks associated with investing in memecoins:
- Macro regime change: A significant rebound in inflation or a reversal of monetary easing could invalidate the macro thesis of maintaining long positions in risk assets.
- Idiosyncratic Events: Events such as major exchange attacks, regulatory changes, or significant market crashes could disproportionately affect memecoins.
- US Election Results: “Counterintuitively, memecoins could underperform this cycle if Trump wins the election,” Kai speculates.
- Emotional Attachment: Warns against becoming too emotionally involved in any community, as this can cloud judgment. “Identity can create emotional attachments that cloud your judgment as an investor.”
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Kai emphasizes the importance of understanding the psychology of investors in the cryptocurrency market. “Ultimately, the question again becomes: 'What does the average crypto investor really care about?' It's not the technology. It is not the product. It is the token, which embodies greed and the expectation of greater profits, that ultimately consumes this investor,” he writes.
However, the crypto analyst advises investors to remain vigilant and adaptable: “To avoid shipwreck, we must monitor macroeconomic conditions for any signs of a regime change. We must also be alert to idiosyncratic events that could invalidate the thesis for investing in any specific token.” Kai concludes: “Good luck and for the love of dogs, don't pass up this (yet) 100x opportunity.”
At press time, WIF was trading at $2.67.
Featured image from iStock, chart from TradingView.com
