The post Is the Meme Coin Frenzy Truly Over? Not Quite, Says Kaiko Research appeared first on Coinpedia Fintech News
Meme coins, the fun and often humorous cryptocurrencies that took the internet by storm, have had a rocky start this year. According to a recent Kaiko report, most meme tokens have struggled, with losses ranging from 10% to as much as 70% since the beginning of the year. But does this mean the meme coin frenzy is over? Not quite.
Meme Coins Face Ups and Downs
Kaiko’s recent report highlights that while popular meme tokens like Dogecoin, Shiba Inu, and newer coins have seen significant price drops this year, their popularity hasn’t faded completely.
Last year, these tokens outperformed many other cryptocurrencies thanks to their hype and the chance of making quick profits.
This year, despite the volatility, the recent surge in new meme coin launches, particularly on Solana, is evidence that traders continue to engage with these assets, betting on the next viral success.
Exchanges and Market Makers Profiting From Memecoins
One reason meme coins continue to grow is because they are profitable for exchanges and market makers. The gap between the buying and selling price of meme coins is much higher than for bigger cryptocurrencies like Solana (SOL) and Ripple (XRP). This allows market makers to earn more from these trades.
Exchanges are also taking advantage of it as Meme coin trading brings in millions in fees, and centralized exchanges (CEXs) have been adding them at a faster pace since 2020.
While U.S. platforms like Coinbase have been slower to list meme tokens than offshore exchanges, they are catching up. Some meme tokens, such as PNUT, TRUMP, and MELANIA, landed on major exchanges like Binance and Coinbase within days, largely due to their hype-driven appeal and connections to prominent figures.
Liquidity and Volatility Challenges
Kaiko’s analysis warns that the rapid listing of meme coins comes with its own set of challenges. These tokens often experience massive trading volumes that far exceed their available liquidity, especially at launch.
For example, the TRUMP token saw $16 billion in trading volume on January 20 nearly 30% of Bitcoin’s daily volume despite having limited liquidity. This mismatch between volume and liquidity can lead to extreme price swings, forcing market makers to widen bid-ask spreads to manage risk.
Ultimately, this drives up costs for traders, making meme coins a high-risk, high-reward investment.
What’s Next for Meme Coins?
Even though meme coin hype has slowed this year, it’s far from over. Their mix of humor, community-driven support, and speculative appeal keeps attracting investors.
As exchanges adjust their listing strategies moving from “allowlists” to “blocklists” to better manage new tokens meme coins will likely remain a key part of the crypto world.
