The world of cryptocurrency is abundant with a variety of digital assets. Although Bitcoin [BTC] continues to dominate, meme coins such as Shiba Inu [SHIB] and Pepe coin [PEPE] have gained popularity among ordinary people. The current meme coin craze has undoubtedly attracted many to the industry, but what is the main factor behind these assets’ appeal to the working class?
Markus Thielen, who is the head of research at Matrixport, has compared investing in meme coins with participating in a lottery. He pointed out that people often participate in lotteries with the hope of winning a huge amount of money, and investing in affordable meme coins works similarly. A lot of people invest, but only a few end up making significant gains.
Thielen added,
“There are numerous studies done on how most people in lower socio-economic classes play the lottery […] as that is their way to get out of their lower economic class. The people that speculate in the lottery are trying to make money lightning fast, and I think that’s very similar with crypto.”
During the initial rise of Shiba Inu in 2021, some people who were broke and unemployed made millions by investing just a few hundred dollars in meme coins. However, this trend was observed only during the early stages and the peak of Shiba Inu. As the number of investors in the asset increased, the phenomenon of individuals becoming millionaires by investing in SHIB became less frequent.
Shiba Inu and Pepe: a short-lived fad or a sustainable investment option?
Shiba Inu has gained utility and popularity, but other meme coins such as PEPE and Milady have yet to do so. Despite this, these coins have seen significant growth in value without any apparent utility. For example, PEPE experienced a surge in value from April 29 to its peak on May 5, with a price increase of approximately 1,200%. However, Santiment attributes this growth mainly to speculation and crowd expectations rather than any intrinsic value.
The report suggests that the social dominance of PEPE has significantly decreased, indicating that meme coins are mainly influenced by market sentiment rather than intrinsic value or correlation with Bitcoin and macroeconomic events. Dr. Anastasia Hronis, a clinical psychologist specializing in gambling addiction, shared her perspective on this. She stated that younger investors have a greater tendency to invest in meme coins, possibly because they find them more entertaining.