(Public) Memo - Gold Rush In Crypto
By: Wilson
For those of you not familiar with this meme, it's what crypto enthusiasts tell the nonbelievers. If you give any signs of doubt, "paper hands" and "have fun staying poor" are usually some of the things thrown at you.
With the recent Trump US presidential victory, the hint of a strategic reserve for Bitcoin has the community hyped and pumped. Not since the glorious NFT days have I seen so much euphoria being injected into an investment community.
Yet as I will illustrate to you, just because the tide lifts all boats doesn't mean that it will have a good outcome for the rest. In fact, it usually never ends well. Like the game of hot potatoes, it's always the ones that least expected that end up falling victim to this new bubble sensation.
MEME Coins
My favorite category in the cryptocurrency community is the MEME coin category.
At the top of the list, Dogecoin takes the helm coming in at a market cap of $59.7 billion. What started off as a joke from Elon Musk has now turned itself into something serious. At this market cap, it dwarfs the market cap of Suncor Energy (SU) ($46 billion), which produced 812k b/d of oil in Q3 2024.
If, hypothetically, one could take one of these entities and make it vanish. Which one do you think will have the most impact on this world?
Well, that doesn't require a lot of brainpower to figure out, but if the oil market suddenly lost 812k b/d of oil production, the supply & demand outlook would immediately change for 2025, while the disappearance of Dogecoin wouldn't have any impact.
But that's beside the point. Because on one hand, you have a company that's traded on "fundamentals", and on the other, you have a speculative asset that can demonstrate human emotions in real time. Yes, I know energy stocks are also capable of illustrating human emotions as well, but it's more to the tune of depression than excitement.
So what makes people want to buy Dogecoin? I don't know and there's no intrinsic value to Dogecoin. But there isn't any value to any of the MEME coins I posted above. In total, if you take the top 100 MEME coins and add up its current market cap, it's $118 billion.
I guess MEMEs are worth something after all.
Things you often see at the top...
As I was scrolling through X today, I saw this post from Le Shrub:
Source: Le Shrub
At first, I had to pause and double-check to make sure this tweet was real. I'm a subscriber to Citrini, so I checked his X feed to make sure the post was real, and then I double-checked the existence of Orca with salmon hat.
And to my astonishment (disappointment), it's real and it has a market cap of $100k.
Just when I thought Fartcoin reaching nearly $900 million market cap was the sign of the top, things are starting to get incredibly out of hand.
But the craziness doesn't end there. Did you know you can start your own shitcoin in less than 30 seconds?
This was demonstrated by someone on X.
What we are witnessing today is unparalleled in terms of scale and speed. The digital age has made the speculation that much easier and the internet has made it all too accessible. At the end of all this, there are going to be a lot of people burned, and while there are always semi-truths to bubbles, the fringe assets (shitcoins) always get destroyed.
What pops the bubble?
I don't know the answer. But bubbles never pop because there is an obvious catalyst, it pops on its own weight. It simply runs out of people buying more shitcoins. It simply runs out of suckers.
Perhaps more and more people will discover how easy it is to start your own memecoin or shitcoin, and the abundant supply overwhelms. Or perhaps, people just wake up one day and realize that owning something called Fartcoin that has gone up 3x in one week may not be considered prudent trading.
I don't know, and if I knew the answer to this question, I would've participated in the bubble, right?
Maybe I'll just have fun staying poor and watching all of these people get rich. Or maybe temperament is the only thing that I have that gets me through this insanity.
Whatever the case, this won't last. It never does. And history often shows that the people who end up getting in when things get wild always lose money. This time is no different.
Analyst's Disclosure: I/we have a beneficial long position in the shares of SU either through stock ownership, options, or other derivatives.