In 2023, meme coins continue to underperform the broader crypto market. While dogecoin (DOGE 0.63%) is up 21% on the year, and Shiba Inu (shib -0.36%) is up 37%, other crypto tokens are doing much better. For example, Ethereal (CRYPTO: ETH) has risen 59%, and Bitcoin (CRYPTO: BTC) It's up 82%.
In equity markets, this type of underperformance would be punished quickly and severely. But in the crypto markets, this does not seem to be the case. Hope springs eternal that somehow -- somehow! -- Dogecoin will finally hit the $1 mark, or the next popular meme coin will somehow make us all crypto millionaires. However, the reality is that meme coins are terrible investments, now more than ever.
meme coin underperforming
While meme coins have always been highly speculative, at least in the past, they came with the promise of almost unlimited upside. Remember early 2021, when dogecoin experienced a massive 14,000% rally? Dogecoin eventually shot up to its all-time high of $0.74. Billionaire Elon Musk was cheering for the meme coin, and the future looked as bright as ever for Dogecoin.
Image source: Getty Images.
But contrast that situation with what is happening now. Musk continues to cheer for the token, but not with the same impact. For example, in early April, he swapped Twitter's iconic bird logo for a cartoon Shiba Inu dog, which is Dogecoin's mascot. Traders took it as a bullish sign for Dogecoin. There was a one day rally of 30%, but after that Dogecoin price fell.
Simply put, the same types of marketing tricks that might have worked in the past no longer work today. Musk can no longer wear a Dogecoin T-shirt to the Super Bowl (as he did this year) and expect the Dogecoin price to skyrocket. He can no longer tweet a picture of his pet Shiba Inu and have this meme coin come together for more than a few days. If there's one thing the 2022 crypto crash taught investors, it's that it's no fun getting burned while having the next crypto asset crash to zero. And meme coins are quite capable of doing exactly that.
The new meme coin, same as the old meme coin
Of course, there have been some attempts to repair the image of the meme coin. The "old" meme coin had nothing to back it up except hype, speculation, and rumors. The "new" meme coin is based much more on the concept of utility. In layman's terms, this means that a currency actually has some kind of value in the real world.
For example, Shiba Inu the developers are working on a metaverse game where you can spend your tokens. They are also working on a Layer 2 scaling solution called Shibarium that will make it (theoretically) possible to transform Shiba Inu into a gaming and Web3 blockchain. At least, that's what they tell us. The reality is that the new world of the metaverse appears to be just a desperate attempt to burn a large number of the nearly 589 trillion Shiba Inu tokens currently in circulation. And the shibaria? In fact, it caused the price of the Shiba Inu to drop after crypto developers began questioning the code used to build it.
And many of the new meme coins that have appeared in the last year are a little better. In 2022, a "hot" meme coin that had a brief run was tamadoge (CRYPTO: TAMA). It promised greater utility in the form of NFTs and a play-to-win game. But he never managed to escape from the kennel, let alone fly to the moon. does anyone remember bonk (CRYPTO: BONK) -- Solana's new January meme coin? Now it has flattened out.
Should you buy meme coins?
From my perspective, pure meme coins like Dogecoin have no future anymore. They are an artifact of the latest crypto bull market rally. It doesn't matter if you combine the cute Shiba Inu dog mascot with Musk to create a "super" meme coin like dogelon mars (CRYPTO: ELON) either Floki Inu (CRYPTO: FLOKI) or if you go for a completely different dog mascot on a different blockchain for your meme coin. They are all dogs with fleas. Meme coins with additional utility will perform better, but will likely still underperform.
So no, meme coins are not a good investment in 2023. It's not just that they are risky, speculative and based solely on hype. It's that they're also underperforming well against the market and dragging their portfolio down.
dominic basulto He has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
