A popular cryptocurrency analyst has recently suggested that popular meme-inspired cryptocurrencies that have been “flooding the market” exist to help enrich their founder and not to create genuine communities looking to help the cryptocurrency ethos of banking the unbanked.
Benjamin Cowen, a popular analyst with over 700,000 followers on the microblogging platform Twitter, noted that these meme-inspired cryptocurrencies’ “strong community” narrative is “garbage” and aid that most of these coins are “created by the same group, just pumping and dumping until it no longer is profitable.”
While Cowen did not reference any specific cryptocurrencies, his comments come at a time in which some meme-inspired cryptocurrencies including Pepe Coin ($PEPE) and Shiba Inu ($SHIB) have been gaining widespread adoption, despite being known more for their internet meme origins than any technological innovation.
As CryptoGlobe reported, when it listed the meme-inspired cryptocurrency, leading exchange Binance cautioned potential investors that PEPE lacks any inherent utility or value support mechanism. PEPE has been accused of potential insider trading, as 7% of the total token supply was reportedly purchased by insiders or team members minutes after the token generation event.
Despite warnings about the contract owner’s potential ability to modify transaction taxes and blacklist functions, PEPE’s market has seen a remarkable boom. It is now a top 100 digital asset after multiple centralized exchange listings.
Earlier, a fortunate cryptocurrency investor has seemingly managed to turn an investment of just 0.125 ETH in PEPE into a staggering $1.14 million in just a matter of days by buying into it at the right time.
The crypto industry seemed to resonate with Cowen’s concerns. One crypto enthusiast added that investors who fail to take profits and withdraw their initial investment risk becoming “exit liquidity,” regardless of the coin’s community strength.
Memecoins have nevertheless kept on gaining traction. $DOGE and $SHIB combined have a market capitalization that now exceeds the $16 billion market as they gain widespread adoption as accepted payment methods worldwide.
On the other hand, PEPECOIN, the new kid on the block, launched only a month ago and already boasts a market cap of over $629 million despite its lack of utility.
The rapid rise and potential volatility of meme coins pose significant risks to investors, especially those who may be new to the world of cryptocurrency, as many end up underwater after buying.
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