Author: Ryan Grace
November 2, 2024
Performance Dashboard
Good morning my tasty friends. I hope you’re all having a wonderful start to your weekend.
So close, yet so far.
BTC finally broke above 70k this week, coming within a few hundred dollars of a new all-time high, only to see prices fall back into the 60s at the time of writing. Is the chop fest finally over? We might have to wait for the answer until after the election.
Ahead of the US presidential election next week, BTC and ETH implied vols are both trading around 60%, which on a 1-year basis, is closer to the low end of the range with an IV Rank of 25.
Certainly this could all change as election night gets closer, but for now we’re looking at the market pricing in roughly a $6,000 1 standard deviation range in BTC and a $225 range in ETH over the next week.
The election matters, but it doesn’t.
Short-term I’d assume we see heightened volatility in both crypto and traditional markets. That said, I don’t believe the future of crypto hinges on a Trump or Harris presidency.
In the US, the crypto industry needs a defined regulatory framework it can adhere to and I believe the probability of legislative progress is now higher than ever, regardless of the outcome of the election.
And remember, crypto is global. Its estimated 80% of trading volumes occur outside the US, with many countries surpassing the US in crypto adoption. Yes US Spot BTC ETF flows are driving prices higher, but crypto’s future is not solely dependent on who’s president.
Tokenized Culture: Memecoins
But but but, “there’s no intrinsic value!” Screamed those watching as the rocket left earth. They chose to stay behind, but upon realization, anger ensued. These were sophisticated individuals, seasoned market professionals.
The thought of allocating capital to something with no real use case, no utility… A dog wearing a pink beanie! Cute, sure, but what about the fundamentals? Unfathomable.
These aren’t investments, these are jokes. But yet here they are, left only to wallow in FOMO as the missed opportunity flashes higher by another 20% on their watchlist.
– An excerpt from a book I’m writing on meme coins, missed connections, and shattered dreams.
Enter the Memehood
I used to be in the anti-memecoin camp. I didn’t get it. How could anyone invest in something intentionally created to poke fun at their speculative behavior at the same time? Dogecoin, unlimited supply, give me a break.
I’ve since changed my view. Memecoins aren’t going anywhere and they’re good for crypto. They invite participation, build community, and spark curiosity for crypto without requiring deep technical knowledge.
What we call here in the crypto cave, “onboarding without onboarding.”
Memecoins are fun, yes they sometimes lack identifiable intrinsic value or fundamentals, but does it even matter? These tokens create a “gateway” to Web3 for newcomers, where the value lies in the engagement. And sometimes, this fun ends up being worth more than anyone expected.
We explored memes and their investment potential on the tastycrypto show this week, but I’ll go into more detail below.
What are memecoins?
For those of you unfamiliar with the likes of dogwifhat, Bonk, or the original DOGE, memecoins are tokens or coins existing on a blockchain network that are rooted in internet culture, viral trends, or even inspired by moments in time.
For most memecoins, there’s no apparent utility or compelling use case, compared to a cryptocurrency like bitcoin, which is often viewed as a digital equivalent of gold.
Meme coins quite often lack tangible financial basis for their valuation. Instead, much like meme stocks, cash flows and fundamentals take a back seat to virality and community. But, this is exactly what makes them so unique. Not only do fundamentals not exist, but this traditional approach to investing is almost completely irrelevant to memecoins.
The initial perception of a meme’s value and ultimate realization of value in the marketplace is driven solely by attention and awareness. Its cultural relevance then thrives or dies in an almost evolutionary matter as more or less people engage with the meme.
Through blockchain technology this cultural relevance can be tokenized, manifesting as a digital asset in the purest form. Quantum finance if you will.
In quantum mechanics, particles can exist in a state of “superposition,” where they hold multiple potential states simultaneously until observed. Similarly, memecoins exist in a kind of financial superposition: they are both worthless (lacking intrinsic value) and priceless (driven by cultural value and speculative demand) at the same time.
This paradox, much like quantum uncertainty, only “collapses” through market forces, either validating them with skyrocketing value or disregarding them into obscurity.
Memecoins live in a state where their value is simultaneously everything and nothing—until the market decides.
This optionality is why I believe memecoins as a thematic investment deserve serious consideration from investors and hold a real place in a crypto portfolio. If not for their potential asymmetry, but also because… They’re fun.
There’s seemingly also some utility.
More than a Meme
It’s probably difficult for most to reconcile Fartcoin’s market cap of $20 million, or SLERF currently valued at $80 million (a token on the Solana blockchain featuring a sloth to differentiate itself from all the dog themed coins in the meme kingdom), but across crypto, communities, brands, and entire ecosystems are developing around some tokens.
Does this mean all memecoins are smart investments? Obviously not, but I do think it’s important to be aware of.
Take DOGE for example, the original memecoin, which started as a joke, reached a valuation of over $80 billion last cycle and a pinnacle of cultural significance through Elon Musk and Saturday Night Live.
Following Mark Cuban’s embrace in 2021, Dallas Mavericks fans can now use DOGE to purchase tickets and merchandise with the cryptocurrency. DOGE is relevant and likely has the potential to remain relevant for some time.
This is its intrinsic value. And, also its ability to be wildly volatile to the upside.
Bonk, another “dog coin” on the Solana network was airdropped to Solana community members as a way to boost engagement on the network, following the collapse of FTX in late 2022. Unique to Bonk is its transaction fee which is used to fund a treasury for investing in Solana based projects which subsequently contributes to the growth of the Solana network.
What started as a way to drive engagement during a time when the future of Solana was clouded in uncertainty, has now evolved into a $1.5 billion ecosystem, including a trading bot, rewards program, and on-chain content platform.
These are just a couple of examples of how value is derived from the tokenization of culture, ideas, and memes. Which, without crypto, wouldn’t be possible in the same way.
Is it a benefit to be able to invest a tokenized version of literally almost anything? Maybe.
As a trader, I certainly welcome the opportunity.
Trade Anything
My point here is that tokenized culture (memes) should be taken seriously, as tokenization allows movements, like internet memes, popular brands, or social causes, to become digital assets which can be bought, sold, and owned. In turn, creating an almost limitless number of investment opportunities.
Memecoins create unique, community-driven economies where people invest not only for financial returns but to engage with something culturally relevant, if only momentarily.
Through crypto, it’s possible for people to express their support for ideas, causes, or humor in a financial way, capturing the intangible value of culture and converting it into a tangible, tradable asset on the blockchain.
What was once ephemeral, like a meme or an inside joke, is now a collectible stake in an evolving, internet-powered cultural landscape.
The Meme Macro Trade
Finally, let’s take a slightly different approach. Love ‘em or hate ‘em, memecoins are a macro driver of crypto adoption and value creation across blockchain networks.
Ethereum, Solana, and Base are seeing record transaction volumes and user engagement, due to a surge in memecoin activity, and this engagement is instrumental to the future growth and reliance of these networks.
When people go on-chain to trade Doge knock-offs and pixelated pets, they’re actually doing something much bigger. It’s creating a kind of flywheel effect where more activity means more liquidity, which brings in more people and makes the network even more appealing.
Recently memes have provided a significant boost to Solana’s growth trajectory. Coinbase’s Base network, even as a newcomer, is also building out its reputation, thanks in part to memecoin traffic.
In short, memecoins are triggering massive network effects that benefit everyone on the chain. The increased demand and data from memecoin trading help secure the network, drive costs down, and make the infrastructure more robust.
So whether you’re here for the technology or just waiting for “blast off mode,” memecoins are undeniably adding value to these networks and contributing to the growth of crypto.
Bag Battles
Soon on the tastycrypto show, we’re going to test out a new “concept,” if you will. We’re calling it Bag Battles. The concept is simple, we have a limited amount of money and unlimited memecoins. We’re going to pick 3 and see who comes out on top each week. No fundamentals, only fun. There will be prizes for the losers too… Of course.
Watch The tastycrypto Show live every Monday and Wednesday at 4:30 on tastylive and type crazy things in the chat on YouTube.
Next week on The tastycrypto Show
Monday 11/4: How Do I Use Ethereum? – Decentralized Staking
Wednesday 11/6: Bitcoin: The Ultimate Hedge
tastycrypto Show Highlights
- Frank tries to redeem himself with the people of dogtok
- Ryan discusses bitcoin to $100k as it whispers in the ear of its ATH
- Glen & Ryan compare memecoins to penny stocks
- Ryan gets frank <closer> to culture on chain
- BTS: the office went bananas for Halloween
Join in the fun and hop in the live chat during the show!
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