Some memecoins are evolving by adding utility, such as payment systems, but most lack the fundamentals for long-term success. They may have a place, but sustainability depends on adding real-world use cases.
- Jakob Brezigar
- Last updated: 3. October 2024
- Reading time: 5 min
Are Memecoins Further Delaying the Bull Market? Pump-Fun, Sun-Pump
The rise of memecoins has generated a lot of attention in the cryptocurrency market. While some view these tokens as fun and speculative, others argue that memecoins are delaying the bull market by diverting attention and liquidity from more established and utility-driven cryptocurrencies. This article examines how the memecoin frenzy may be impacting market dynamics, and how platforms like Pump-Fun and Sun-Pump are playing a role in this evolving landscape.
Table of Contents
How do memecoins delay a bull market?
Memecoins divert investor attention and liquidity from fundamental crypto projects to speculative tokens, reducing capital available for long-term growth. This speculative focus creates market volatility, making it harder for a sustainable bull run to develop.
Key Takeaways - Memecoins Delaying the Bull Market
- Memecoins attract new investors but may divert funds from projects with real-world utility, delaying a sustained bull market.
- Platforms like Pump-Fun and Sun-Pump contribute to market volatility by enabling rapid, speculative token launches that often fail quickly.
- The “casino mentality” around memecoins leads to artificial price spikes and crashes, destabilizing the broader cryptocurrency market.
- For a true bull run, the market needs to shift focus back to fundamentally strong projects that offer long-term value.
- Some memecoins are evolving by adding real utility, but most lack the fundamentals to survive long-term in the crypto ecosystem.
The Rise of Memecoins: A Market Distraction?
Memecoins, despite their often comical origins, have grown into a serious force within the cryptocurrency world. Tokens like Dogecoin and Shiba Inu, which began as jokes, now command market capitalizations in the billions, leading to debates about whether they are distracting from more substantial projects. These tokens are driven by virality, celebrity endorsements, and social media hype, often overshadowing tokens with real-world applications. The issue here is that when liquidity, or capital, is funneled into memecoins, it pulls away from more established altcoins and projects designed to drive innovation within blockchain technology.
In a typical bull market cycle, capital flows start with Bitcoin, trickle down to Ethereum, and then into altcoins with solid fundamentals. But, as analyst James Check noted, we are now witnessing an unusual pattern where money bypasses many high-potential altcoins and heads straight into memecoins. This has created a distorted market where speculative tokens are absorbing the liquidity needed for long-term project development. As a result, many analysts and investors believe that the bull run is being delayed as capital is tied up in fleeting, hype-driven assets.
Why Memecoins Attract Investors
The simplicity and entertainment value of memecoins have proven to be powerful draws for investors, especially for those new to cryptocurrency trading. While traditional altcoins can have complex use cases and require a deep understanding of blockchain technology, memecoins are much easier for the average retail investor to grasp. Their appeal lies in their low price points and the possibility of astronomical gains—appealing to the “FOMO” (fear of missing out) mentality that drives speculative bubbles.
This speculative aspect of memecoins allows them to gain momentum quickly, fueled by viral marketing and the promises of quick riches. However, the reality is that most memecoins are not designed for longevity. Data shows that only a small fraction of memecoins launched on platforms like Pump-Fun reach sustainable market caps. Despite the low success rate, many investors are drawn to the allure of becoming overnight millionaires, even though the odds are often worse than gambling at a casino. This behavior pulls much-needed capital from projects with legitimate use cases and stable growth trajectories.
Short-Term Hype vs. Long-Term Value
Memecoins provide an adrenaline rush for those seeking short-term profits, but most of these tokens lack the fundamentals required for long-term sustainability. Their success is often based on “pump-and-dump” schemes, where early investors push the price up through hype and then quickly sell off, leaving later investors with heavy losses. For instance, when tokens like PEPE surged earlier this year, many traders capitalized on the hype, only for prices to plummet shortly after the initial surge.
This focus on short-term gains comes at the expense of the broader cryptocurrency ecosystem. Investors and traders caught in the memecoin frenzy miss out on opportunities to support projects with real-world applications and solid fundamentals. As more capital is locked up in speculative assets, the market becomes fragmented, with fewer resources available to fuel the next bull run. Long-term investors are beginning to question whether this pattern of speculative investment is sustainable, or if it will cause prolonged stagnation in the market.
Pump-Fun VS Sun-Pump
Platforms like Pump-Fun and Sun-Pump have gained notoriety for enabling rapid memecoin launches, further fueling the speculative frenzy. Pump.fun, for example, has seen millions of tokens created since its launch, but only a small fraction of these coins have reached a significant market cap. As of September 2024, less than 2% of tokens on the platform had hit a market cap of $69,000, the threshold required to trade on certain decentralized exchanges.
Sun Pump, a newer platform built on the Tron network, saw a similar rise in token creation, with thousands of memecoins launched in just a few months. However, like Pump-Fun, most of these tokens fail to maintain value, and activity on the platform has dwindled since its peak in mid-2024. Both platforms exemplify the chaotic and volatile nature of the memecoin market, where a few tokens gain massive attention while the majority fade into obscurity.
The crypto market is often filled with potential scams, something we’ve already discussed in a previous blog post. It’s no surprise that similar issues arise when it comes to memecoins, as their popularity makes them a frequent target for fraudsters. While platforms like Pump-Fun and Sun-Pump provide an avenue for memecoin speculation, they also highlight the risks involved in this type of investing. The vast majority of tokens launched are unlikely to succeed, making it difficult for investors to identify the few that might yield substantial returns. This creates a high-risk environment where many participants are essentially gambling, further contributing to the casino mentality of the memecoin market.
How Memecoins Divert Attention from Serious Projects
Shift in Focus from Utility to Speculation
The rise of memecoins has shifted the focus of the crypto market from utility-driven projects to speculative assets. While blockchain technology offers the potential to revolutionize industries such as finance, healthcare, and supply chain management, the current market dynamic is centered around tokens with little to no intrinsic value. Serious blockchain projects, which take years of development and focus on solving real-world problems, are being overshadowed by tokens that exist solely for entertainment.
This shift in focus has caused frustration among many in the crypto space. Developers and investors who are building infrastructure for the future of decentralized finance (DeFi) or working on innovations in blockchain scalability find it difficult to attract attention or funding when memecoins dominate the headlines. Even though these projects have the potential to drive long-term value and adoption, they are often overlooked in favor of the quick gains promised by meme tokens.
FOMO and Its Role in Fueling Unsustainable Growth
FOMO plays a major role in the rapid rise of memecoins, with social media platforms like Twitter and Reddit playing a key role in spreading hype. As influencers and celebrities promote these coins, investors rush in, afraid of missing out on the next big thing. This creates a cycle of unsustainable growth, where the value of a token skyrockets, only to crash once the hype dies down.
In many ways, this behavior mirrors the early days of the dot-com bubble, where companies with little more than a website and a dream attracted massive investments, only to collapse when the market corrected. Memecoins, too, are susceptible to this kind of volatility, with most projects failing to deliver long-term value. As FOMO continues to drive investor behavior, the risk of market destabilization grows, further delaying a true bull market.
Memecoins and Market Volatility: Delaying the Bull Market?
Artificial Price Movements Creating Market Confusion
One of the biggest concerns regarding memecoins is the artificial price movements they generate. Memecoins like PEPE and Bonk are often subject to extreme volatility, which can give the illusion of a thriving market but leads to confusion for investors attempting to navigate the crypto landscape. These price spikes are rarely the result of organic growth or a reflection of a token’s underlying utility. Instead, they are largely driven by speculative traders looking for quick profits.
Artificial price movements can have ripple effects throughout the broader cryptocurrency ecosystem. As capital flows into these short-lived pumps, long-term projects suffer from a lack of investment. The result is a market that feels overheated and unpredictable, with little indication of whether a genuine bull run is on the horizon. For investors and institutions waiting on more stable conditions, the ongoing obsession with memecoins is causing hesitation, further delaying the start of a new bull market cycle.
Casino Mentality
The speculative frenzy surrounding memecoins fosters what many in the industry call a “casino mentality.” Investors, particularly those new to cryptocurrency, approach memecoins like gamblers placing bets on a roulette wheel, hoping to hit the jackpot. This approach undermines the core principles of investing, which traditionally focus on analyzing market fundamentals, project utility, and long-term value. Instead, memecoin traders often bet on hype-driven price movements with little regard for the sustainability of the token.
While some traders strike it rich, the majority end up losing money, especially when the “dump” phase of a pump-and-dump cycle hits. Analysts have compared memecoin trading to gambling in its purest form: the odds are poor, but the allure of a potential windfall keeps participants coming back. This mentality not only destabilizes the market but also deters more serious investors from entering the space, further contributing to the delay in a sustained bull market.
Is There a Place for Memecoins in the Future of Crypto?
Despite their flaws, memecoins are not without their place in the broader crypto ecosystem. Some argue that they play an important role in onboarding new users into the world of blockchain technology. For many first-time investors, memecoins are a gateway into crypto, offering an easy and low-stakes entry point. Additionally, some memecoins are beginning to explore ways to incorporate real-world utility into their frameworks. Shiba Inu, for example, has introduced platforms that aim to provide payment solutions and security technologies, suggesting that memecoins can evolve beyond their meme status.
However, the long-term sustainability of memecoins remains an open question. While some may survive by developing use cases and integrating into broader decentralized finance (DeFi) ecosystems, most memecoins lack the fundamentals to remain relevant in the years to come. The proliferation of memecoins during this market cycle may, in hindsight, be seen as a passing phase, one that ultimately burns out as investors return to more stable and utility-driven projects.
Orcabay’s Perspective on the Impact of Memecoins
Orcabay, a key player in the crypto space, has voiced concerns about the impact of memecoins on the broader market. The firm believes that the overemphasis on speculative tokens is diverting resources from projects with the potential to drive real innovation. Orcabay’s customized approach to market-making focuses on projects with strong fundamentals and long-term growth potential, aligning with the firm’s philosophy of sustainability and transparency.
Orcabay’s trading strategies, which include daily monitoring and in-house algorithms designed to protect against market manipulation, could serve as a model for other firms in the industry. The firm emphasizes the importance of focusing on projects that offer real-world applications, as opposed to those driven by speculation and social media hype. By concentrating on these types of projects, Orcabay believes the next bull run will be more sustainable and impactful.
What Needs to Change for the Next Bull Run?
For the market to experience a true bull run, a shift in focus is needed. According to Orcabay, the market must move away from short-term speculative gains and return to projects with real utility and long-term growth potential. Memecoins, while fun and occasionally profitable, are not a sustainable foundation for market growth
Blockchain technology has the potential to revolutionize industries, but this potential will not be realized if capital continues to be funneled into speculative assets. Orcabay suggests that the next bull run will only occur when the market refocuses on projects that offer tangible value, such as decentralized finance, supply chain innovations, and real-world asset tokenization.
Refocusing on Fundamental Projects with Real-World Use Cases
As the memecoin bubble gradually deflates, the crypto market will likely return to projects that solve real-world problems. Orcabay highlights the need for investors to refocus on fundamental blockchain projects, which offer long-term value and stability. These projects, unlike memecoins, are built to last, providing solutions to existing problems in finance, data security, and other industries.
Concluding thoughts on Memecoins Delaying the Bull Market
Memecoins have captured the crypto market’s attention with their speculative appeal and potential for quick gains, but this trend is delaying a true bull market. Platforms like Pump-Fun and Sun-Pump exacerbate market volatility, pulling liquidity from projects with real-world utility. While some memecoins are evolving with added functionality, the majority lack long-term sustainability. To see a new bull run, the market must shift focus back to strong, utility-driven projects that offer lasting value.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, investment, or other professional advice. All opinions expressed herein are solely those of the author and do not represent the views or opinions of any entity with which the author may be associated. Investing in financial markets involves risk, including the potential loss of principal. Readers should perform their own research and consult with a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results.
Jakob Brezigar
Jakob, an experienced specialist in the field of cryptocurrency market making, boasts an extensive international presence. With Orcabay, he has skillfully managed major operations and deals for a wide array of global stakeholders.
