A Bloomberg article revealed that hedge funds are recently becoming more attracted to the memecoin market due to its recent price surges and earnings exceeding those of Bitcoin and major altcoins.
Memecoin Mania
An illustration of memecoins’ attraction for conventional financial organizations is Stratos, a company based in Newport Beach, which started a liquid fund utilizing the Dogewhats token in December.
The cryptocurrency Dogwifhat, which is built on the Solana platform and features a mascot of a dog wearing a beanie, has gained significant popularity in the digital currency market. Its value has surged more than 300-fold.
In Q1 of 2024, Stratos experienced a significant surge, reportedly resulting in an impressive 137% return – surpassing crypto market gains. Contrastingly, Dogwifhat has since dropped over 35% from its peak price of $4.83 on March 31 and is presently valued at $3.09.
It’s worth noting that Stratos isn’t the only hedge fund exploring memecoins; others are jumping on the bandwagon too.
For example, Brevan Howard, a well-known asset manager, is said to have made a small investment in memecoins. On the other hand, memecoins were highlighted by Pantera Capital, a crypto investment firm, for their longevity and the substantial trading possibilities they offer.
Is It Just Gambling?
Although some hedge funds are excited about memecoins, the report points out that there is still a great deal of doubt among crypto market participants regarding these digital currencies.
Quinn Thompson, the creator of Lekker Capital, a forward-thinking hedge fund dabbling in memecoin trading, drew a comparison between the present excitement and the feverish speculation historical stock markets experienced with companies such as GameStop.
Thompson also pointed out that memecoins serve as the leading edge for wild speculation, while stressing their similarity to gambling when it comes to their trading dynamics.
Despite this, Cosmo Jiang, an investment manager at Pantera Capital, pointed out that memecoins have moved beyond being simple jokes and represent something more significant for certain communities or ideologies.
Memecoins can be quickly created and released into the market using apps such as Pump.fun, leading to an influx of these coins on blockchains like Solana and Coinbase’s Base. The appeal lies in their low trading fees.
Due to recent advancements, Josh de Vos, research head at CCData, emphasized the enhanced foundation for memecoins. This includes greater accessibility to funds and the emergence of sophisticated futures contracts on established cryptocurrency exchanges.
With an increasing number of hedge funds showing interest in memecoins, Rennick Palley of Stratos expects a heightened level of attention towards these cryptocurrencies.
In a similar way that cryptocurrencies faced initial doubt and disbelief, Palley proposes the possibility of meme-exclusive investment funds arising. These new funds would parallel the emergence of Non-Fungible Token (NFT) funds.
In Q1 of 2024, memecoins took center stage in the crypto world, bringing significant profits. A study by CoinGecko revealed that these emerging tokens yielded impressive average returns of approximately 1313% for their top selections.
At present, Dogecoin (DOGE), the most widely used meme cryptocurrency, is priced at approximately $0.1616, representing a 5% increase over the past week. Its market value reaches an impressive $23 billion.
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2024-04-24 03:40