Meme coins are currently the dominating trend on the crypto market once again due to PEPE. After the furious price rallye of PEPE, investors are feverishly looking for the next meme coin that makes 100x.
Whether this trend will continue for much longer or if this marks a top for the crypto market remains to be seen. However, historically, the meme coin hype marked local highs for the Bitcoin price (and thus the rest of the market).
Whales Reveal All About Meme Coins Like PEPE
In a new Twitter thread, Frank Rotman, co-founder QED Investors, spilled the beans about meme coins. QED Investors is a leading VC in the fintech space and has AUM of $3.2 billion. The company has already invested $662 million in startups. So Rotman is well connected and knows what he’s talking about.
In recent days, Rotman has spoken with traders who have put anywhere from $500 to more than $20 million into meme coins and “their views are eye-opening,” the venture capitalist says. The biggest insight was (although not shocking): Memes coins are a game.
The concept of the game, according to Rotman, is to attract as many other participants as possible to the list of game participants. “Your goal is to convince people that being on the list is cool.” Once people are on the list, they are expected to tweet funny images or diagrams to generate FOMO for the game.
However, the number on the list matters because members can sell new players as much or as little as they want, with prices fluctuating based on supply and demand. Ultimately, this proves that the founders and previous investors are the biggest profiteers from such a Ponzi scheme.
The answers Rotman has received are extremely revealing. Big investors are aware of the game. One anonymous person said:
It’s a damn fun game once you’re in it. You get to act like an idiot, annoy everyone around you and make silly money doing it. If it doesn’t work out then you try again. I know it doesn’t make any sense but it feels great when my money is doubling every day.
None of Rotman’s respondents believe that meme coins are a “thing of value.” Rather, they know that meme coins are a Ponzi scheme, which is often dismissed as “movement.” Moreover, as PEPE has shown, larger meme coin investors are out there to make a quick buck. Rotman stated:
It was obvious that every person I talked to was looking for quick gains. They wanted the dopamine jolt that comes with quick 50-100% movements. The volatility and the potential to 10X+ their money or lose it all quickly was a feature, not a flaw.
WAGMI?
According to the QED co-founder, smaller investors see meme coins as a chance to live the “we’ll all gonna make it” ethos while whales laugh at it. The goal of the whale traders is to stand behind a token long enough to drive demand and then use FOMO to provide their exit liquidity.
The big traders have well-formed views about where demand comes from, when it will come, and who’s going to be left holding the bag in the end.
One direct quote was: “If you don’t know where your exit liquidity is going to come from then you’re someone else’s exit liquidity. Nobody wants to hold these s-t coins forever. If you want a nice car you have to get good at hyping people up while you’re dumping.
At press time, PEPE appears to have found its top after the Binance listing. PEPE traded 56% below Friday’s all-time high.
Featured image from iStock, chart from TradingView.com
