Memecoins undoubtedly seize a giant slice of crypto observers’ consideration — even when not everyone seems to be a fan. However knowledge exhibits they’re gobbling up a rising quantity of the crypto financial system too.

The sector — powered by the likes of dogecoin (DOGE) and Shiba Inu (SHIB) — made up 3.16% of the mixed market capitalization of all cryptocurrencies on Dec. 1, up from 1.3% initially of the yr, in keeping with a brand new report from crypto trade CEX.IO. For those who exclude crypto titans bitcoin (BTC) and ether (ETH), memecoin market share jumps to 11.21% from 4.2%.

That equates to huge {dollars}: greater than $140 billion of market worth, per CoinGecko knowledge, stashed in cryptocurrencies that do not faux to have any utility. Extraordinarily risky by nature, they are usually named after animals, viral web jokes and political figures or occasions.

As bitcoin topples the $100,000 threshold for the primary time, memecoins are additionally rocketing greater. Dogecoin has soared 168% since Donald Trump’s election spurred all through the crypto market. Dogecoin is now the seventh-largest cryptocurrency by market cap at $64 billion, in keeping with CoinDesk knowledge.

The query is whether or not that is simply how issues work within the early phases of a bull market today, or a harbinger that issues have gotten overheated.

“In earlier cycles, memecoins usually skilled their largest capital rotation towards the top of the post-halving bull run,” Alexandr Kerya, vp of product administration at CEX.IO, instructed CoinDesk in an e-mail.

“Halving” refers back to the once-every-four-years occasion — the newest one was early in 2014 — when the reward for mining bitcoin will get slashed by 50%, which frequently correlates with crypto beneficial properties.

“Nevertheless, this cycle stands out as a result of important rise in memecoin affect occurring effectively earlier than the halving, and persisting even throughout bitcoin’s consolidation mid-year,” Kerya added.

The oldest memecoin, dogecoin, was created as a joke in 2013 and gained important consideration throughout the bull market that resulted in 2021 as Tesla CEO Elon Musk repeatedly posted about it on social media. Different dog-themed cash, like SHIB, rode on DOGE’s coat-tails and reached billions of {dollars} of valuation. Over time, memecoins got here to be thought of as a crypto funding class in their very own proper, in the identical vein as decentralized finance (DeFi) tokens, synthetic intelligence tokens or privateness cash.

“Whereas memecoins could ultimately attain a plateau, much like DeFi, the market continues to be within the means of figuring out the place that equilibrium might be established,” Kerya wrote.

Consuming up market share

The memecoin sector underwent explosive development early this yr, the report mentioned, when the day by day variety of initiatives deployed on Pump.enjoyable — a Solana-based crypto mission that makes it simple for customers to launch tokens — went from just a few dozen a day in February to 1000’s per day in March. These days, over 60,000 memecoins are created day by day, half of them by Pump.enjoyable, the report mentioned.

As a sector, memecoins noticed a 330% enhance of their mixed market capitalization over the interval from Jan. 1 to Dec. 1, the report mentioned. For comparability, bitcoin is up 140% because the starting of the yr, whereas ether is up 71%. Memecoin buying and selling quantity grew 979% in the identical interval, and now accounts for five.27% of all the crypto market’s quantity. Moreover, memecoins retained important quantity in June whereas different sectors of the crypto financial system noticed declines.

“As a gateway for brand new buyers, the expansion of memecoins highlights the growing affect of retail-driven narratives within the crypto market. As a sentiment wager, it displays market optimism and the anticipation of a continuation of the post-halving rally,” Kerya wrote. “Nevertheless, with elevated share of memecoins, it additionally highlights the potential for the quicker look of speculative bubbles. Whereas this might amplify the depth of a bull run, it may also shorten its period.”

The memecoin sector has modified through the years. Dogecoin and Shiba Inu dominated buying and selling quantity and market capitalization in 2021. In distinction, 2024 has seen all kinds of newer memecoins — equivalent to dogwifhat (WIF), Brett (BRETT), Peanut the Squirrel (PNUT) and Popcat (POPCAT) — crack (or come near) the highest 100 cash by market cap.

And whereas the vast majority of the biggest memecoins have been dog-themed up till March, cat-themed and AI-themed tokens have been stealing market share from canine tokens. Political memecoins additionally fared effectively into the U.S. election in November, after which they noticed an 80% drop in buying and selling quantity.

The networks on which buying and selling exercise happens have additionally shifted. Dogecoin has its personal proof-of-work blockchain, which mimics the Bitcoin community’s. Ethereum-based memecoins equivalent to pepe (PEPE) and MAGA (TRUMP) have additionally seen some reputation. However Solana, due to Pump.enjoyable, is the massive winner of the memecoin craze in 2024; the community accounts for 30% of the sector’s buying and selling quantity, and 15% of memecoin market cap relies on it.

Nevertheless, Telegram’s TON community’s memecoin buying and selling quantity grew 750 instances within the final six months, though the blockchain nonetheless solely accounts for 1% of the whole memecoin market cap.

“Given memecoins’ capacity to spice up retail involvement and income era for DeFi platforms, 2025 may see stronger integrations between launchpads and decentralized exchanges to capitalize on this development,” Kerya wrote. “Nevertheless, in ecosystems like Solana, heavy reliance on memecoins has raised issues and will ultimately backfire, straining its broader improvement.”