Beyond the Hype: A Meme Coin Reality Check for Retail Investors

Abstract

In recent years, meme cryptocurrency coins have surged in popularity, evolving from online jokes and viral social media trends to become a point of interest for young retail investors globally. However, this rapid ascent is accompanied by significant risks due to the volatile and speculative nature of these assets, as well as the presence of some outright scams. Understanding the underlying technology of these digital assets and distinguishing between credible projects and potential frauds is essential for making prudent investment choices. This paper aims to serve as a valuable resource for retail investors by providing insights into the foundational technologies of meme coins, practical advice for navigating their fluctuating market dynamics, and strategies for cautiously incorporating them into a diversified investment portfolio. The study explores meme coins' performance relative to traditional cryptocurrencies, bonds, and stocks, highlighting their moderate correlation with major cryptocurrencies and low correlation with traditional assets. While offering substantial returns, meme coins also present significant risks, necessitating thorough research and due diligence for informed investment decisions.

Keywords: Meme Coins, Cryptocurrency, Investment Strategies, Bitcoin, Dogecoin, Social Media Influence JEL Code Classifications: G11

JEL Classification: G11, G12, G13, G18, D53, O33