Memecoin market surges: 85% of crypto holders invest despite risks

But what exactly are memecoins, and why do they capture so much attention? These cryptocurrencies are a unique subcategory, often created as a nod to pop culture trends, turning internet memes into digital assets.

Memecoins often have large, or even unlimited, token supplies. Their unique tokenomics often means their prices are typically lower, and therefore seemingly more accessible to many investors, despite the fact that even large coins like Bitcoin are divisible into smaller units called satoshis. 

While these factors may make memecoins an attractive investment to some, their lack of scarcity in the market has also made them a more volatile investment than many other types of cryptocurrencies. With so much discussion and confusion taking place simultaneously, we asked the crypto community to weigh in and share their perspectives on all things memecoins. 

Our new survey found U.S. crypto holders are leaning into this risk. The majority of our respondents (85%) indicated they currently invest in memecoins. 

Our new data unravels the dynamics of the memecoin space: who holds these tokens, their motivations for investing and the potential ripple effects memecoins are having on the broader crypto landscape.

But what initially sparks interest in these tokens? Our survey revealed three top factors: 

• Dramatic price volatility: The potential for outsized short-term gains was the top reason respondents said they were initially drawn to memecoins. This could underscore the power of crypto FOMO (fear of missing out) on potential gains.
• Recommendations from friends or family: Social influence from these groups was the second-most common factor driving interest in memecoins. Despite the seemingly anonymous nature of the crypto space, word of mouth and personal networks play an important role in memecoin adoption.
• The satirical, fun nature of projects: Memecoins’ playful and humorous elements were the third-most popular reason investors developed an interest in the asset. Many see memecoins as a way to take advantage of being “in” on a fun idea that has the potential for further growth — before others catch on to the trend as well.

Once they’re interested in memecoins, holders cite a mix of motivations for moving forward with their investment decisions. Nearly a third (29%) are drawn by the chance for higher short-term returns, highlighting speculative appeal. Others sought out memecoins as a way to diversify their portfolio (23%) or simply as a source of entertainment (23%).

However, we found female-identifying respondents were slightly more likely to invest in memecoins (86%) compared to 84% of those who identified as male.

Men and women are also equally likely to believe that the potential rewards from memecoins justify the risks, with 31% of both sexes agreeing with this statement for all coins. However, 45% of our survey respondents indicate that this only held true for a small portion of memecoins. 

Digging a little deeper, the data could suggest that female respondents tend to approach memecoin investments with greater caution than male respondents. Half of women believe the risk justifies the reward for only a small portion of memecoins — while only 39% of men feel the same. 

While men and women share similar overall optimism about the potential rewards of memecoins, the fact that women appear more selective could suggest that they take a more calculated and strategic approach — that balances enthusiasm with caution.

Regardless of gender identity, these findings highlight the importance of thoughtful investment strategies when navigating high-risk assets. 

While memecoin investing often involves short-term speculation, many crypto investors prefer long-term strategies like dollar-cost averaging to gain exposure to the crypto market.

As we mention in our new crypto trends report, the rising popularity of memecoins could underscore the crypto community's growing appetite for more socially engaging or financially volatile tokens. Although crypto investors regard these assets as speculative, they also can’t ignore their impact on the crypto market. 

Memecoin’s ability to provide price volatility and capture social trends indicates that they will remain a compelling force in the cryptocurrency landscape for the foreseeable future. 

Monitoring market trends, such as increased adoption, high-profile launches or shifts in sentiment, may help inform decisions about whether and how to participate in this space.