(Bloomberg) -- At a conference in Manhattan last week, a few hundred people gathered to hear cryptocurrency industry luminaries and executives from companies like BlackRock and Fidelity discuss Bitcoin's march into the investment mainstream this year. anus.
Bloomberg's Most Read
However, it was another token that kept coming up in conversations: a newer cryptocurrency, best known for its logo that features the image of a dog wearing a knitted hat. Billionaire Michael Novogratz, CEO of Galaxy Digital, jokingly lamented not having a position in the coin called dogwifhat.
โI don't do it, no matter how much I want to,โ he said to laughter from the audience. "I'm just afraid that if I tweet 'God, I love dogs like Arthur Hayes does,' the CFTC will literally investigate me two days later."
The immediate cause of this year's rally in digital asset markets is the arrival of the long-awaited US exchange-traded funds that are delivering Bitcoin to investors' traditional brokerage accounts. However, as with the conversations at this Bitcoin Investor Day conference, the more capricious impulses of the crypto community are stealing the spotlight in the market, pushing some of the most useless tokens, known as memecoins, to even bigger profits than Bitcoin.
By now, even a normie (the industry nickname for people who aren't crypto) probably knows a thing or two about memecoins, the tokens most famous for their cute logos with dogs or frogs or pop culture references instead. of any hint of blockchain innovation. . Still, the silliness currently on display among the self-proclaimed "degens" in this corner of the cryptocurrency market may come as a surprise.
A website called pump.fun allows anyone to create a memecoin through an automated process. Simply enter a name, an introductory description, and an image that represents the token. Others browsing the website can "mimic" (crypto slang for buying without much research) with whatever memecoins they want.
Spending just a few minutes on the website is fascinating, with dozens of new memecoins created and rapidly increasing in value by traders. There are tokens like BoomerCoin. (Ticker: BOOMER; description: โSell and Grandma Diesโ) among memecoins in almost any pop culture or crypto culture category one can imagine. There's even one that mocks a caricature of a risk-averse traditional finance worker named Jared, with the description: โmemecoins? It sounds too risky, I will never touch them.โ
Elsewhere, a new wave of bots based on the Telegram messaging platform is driving the popularity of blockchain platforms that are cheaper and faster than Ethereum. Tornado Blast, a Telegram bot on the Blast blockchain platform, makes staking with tokens as easy as chatting with ChatGPT. Anyone with a digital wallet and Telegram can buy, sell and transfer tokens with Tornado Blast. The robot also has new features like "Gem Finder," which claims to use artificial intelligence to find coins "that could have a good risk/return ratio for your degens plays," according to the website.
However, while the latest craze has breathed new life into the crypto world's promotional artists, the retail traders they rely on to "imitate" the coins have been slow to return. Global retail trading activity on Binance in February only returned to levels seen in mid-2022, which was the end of the last bull market.
โThere are definitely more retail users returning, but not in the volumes of what we saw in 2021,โ Andy Goldin, global head of data and analytics at Binance, the world's largest crypto exchange, said in an interview. โSome of this memecoin stuff is a little more the province of experienced traders.โ
Still, on the Solana blockchain, the memecoin frenzy is gaining steam. More than $122 million worth of Solana tokens were raised from so-called pre-sales of new coins ahead of their launch, according to data compiled by crypto sleuth ZachXBT.
โMemecoins are so naturally speculative that there is no expectation that they will generate real products,โ said Zaheer Ebtikar, founder of crypto fund Split Capital. โThey are simply people fighting for liquidity and attention. โPeople, especially retail investors who were hurt by the last cycle, are very eager to win it all in one trade.โ
Several recent incidents have served as a reminder of how risky the stir can be.
โโA developer of a sloth-themed memecoin claimed that he accidentally burned a large amount of tokens after the project raised $10 million, essentially losing all the money raised. While this could have become a major legal issue in any traditional market, the token, called Slerf, began trading anyway and now has a total market value of $340 million, according to tracker CoinGecko.
โThe largest casino on Earth appears to have reopened its doors,โ cryptoblog Rekt said in a recent newsletter about the Slerf incident. โThe odds are against us, and yet we apes don't seem to learn. What does this say about us?"
Back at the Bitcoin Investor Day event in Manhattan, it was time for BlackRock's head of digital assets, Robert Mitchnick, to speak. The company's iShares Bitcoin Trust has been at the top of the rankings for new ETFs, amassing more than $17 billion in assets in less than three months. The organizer of the event, crypto personality Anthony Pompliano, asked Mitchnick what's next for BlackRock. And also, of course, what he thought of Novogratz's vision of dogwifhat.
"I think Twitter would love to believe that a dogwifhat ETF is coming next," Mitchnick said with a laugh, before noting that no one should count on it: "Actually, I don't even know what dogwifhat is."
Most Read Bloomberg Businessweek
ยฉ2024 Bloomberg LP
