Memecoins have become an increasingly dominant force in the crypto space, capturing a larger share of market attention and value. As of December 1, the sector, powered by cryptocurrencies like Dogecoin (DOGE) and Shiba Inu (SHIB), made up 3.16% of the total cryptocurrency market capitalization. This is a significant rise from just 1.3% at the start of the year. When excluding Bitcoin (BTC) and Ether (ETH), memecoins accounted for 11.21%, up from 4.2% earlier in 2024, reflecting their growing influence.
This shift in market dynamics translates to a market value of over $140 billion, according to CoinGecko data, in cryptocurrencies that are often without any functional use case. Known for their extreme volatility, memecoins typically feature animal names, internet jokes, and political references.
As Bitcoin surpasses $100,000, memecoins are also seeing impressive gains. For example, Dogecoin has surged 168% following Donald Trump’s election, and now has a market cap of $64 billion, making it the seventh-largest cryptocurrency.
The current rise in memecoins has raised questions about whether this is a typical bull market trend or a sign of the market overheating. Historically, memecoins gained significant traction toward the end of post-halving bull runs, but this cycle stands out due to the early surge in memecoin popularity, which has persisted even during Bitcoin’s mid-year consolidation.
Dogecoin, which was created as a joke in 2013, gained substantial popularity during the 2021 bull run, particularly after repeated endorsements from Tesla CEO Elon Musk. Other coins like Shiba Inu have also capitalized on Dogecoin’s momentum, and the broader memecoin market has become a recognized sector of crypto investing, akin to decentralized finance (DeFi) or AI tokens.
Despite the rise, there is still uncertainty about the long-term sustainability of memecoins. While the sector might eventually plateau like DeFi, its growth has been explosive, with a 330% increase in combined market capitalization between January and December 2024, compared to Bitcoin’s 140% growth and Ether’s 71% increase. Memecoin trading volume has also skyrocketed by 979%, now representing 5.27% of the total crypto market volume. Memecoins even maintained significant volume in June when other sectors experienced declines.
The rapid rise of memecoins highlights the increasing influence of retail investors and sentiment-driven speculation in the crypto market. This surge also raises concerns about the potential for speculative bubbles, which could intensify a bull run but also shorten its duration.
Over the years, the memecoin landscape has evolved. While Dogecoin and Shiba Inu dominated in 2021, newer entrants such as Dogwifhat (WIF), Brett (BRETT), Peanut the Squirrel (PNUT), and Popcat (POPCAT) have joined the fray in 2024, pushing their way into the top 100 coins by market cap. The popularity of dog-themed tokens has waned, with cat-themed and AI-based memecoins now taking a larger share of the market. Political-themed tokens also saw a surge during the U.S. elections in November, only to experience an 80% drop in volume after the results.
The platforms supporting memecoin trading have shifted as well. While Dogecoin operates on its own proof-of-work blockchain, Ethereum-based tokens like PEPE and TRUMP have gained traction. However, Solana has emerged as the biggest beneficiary of the memecoin boom in 2024, accounting for 30% of trading volume in the sector and 15% of the total market cap. The Telegram TON network has also seen significant growth in memecoin trading, with its volume increasing 750 times in just six months, although it still represents only 1% of the total market cap.
As memecoins continue to drive retail participation in the crypto market, they may spur further integration between launchpads and decentralized exchanges in 2025. However, the heavy reliance on memecoins, particularly in ecosystems like Solana, could pose risks and strain the development of the broader network in the future.
