Do meme coins have staying power? Analysts discuss

In the wake of Bitcoin’s recent downturns, traders are eagerly embracing memecoins, anticipating a surge of bullish rallies. As excitement mounts, seasoned analysts are tackling the influx of these fleeting tokens head-on.

Analysts at Needham & Company have identified a significant surge in the popularity and impact of meme coins within the crypto landscape. Driven predominantly by Gen Z and younger millennials, these meme coins have witnessed a staggering 30-fold increase in trading volumes this year, underscoring their rising influence in the attention-driven economy.

The firm attributes the rise of meme coins to several factors. Younger generations, well-versed in leveraging attention through platforms like TikTok, Instagram, and X (formerly Twitter), now view meme coins as a fresh avenue for investment, intertwining digital currency with pop culture and attention-grabbing memes.

This demographic shift stems from a blend of dissatisfaction with traditional investment avenues and a desire for “fair financial opportunities,” bypassing the typical venture capital advantages in crypto investments.

“Younger generations believe they need ‘lottery-like returns’ to afford ‘coming of age assets’ such as housing/property, which seem out of reach. The surge in meme activity benefits COIN and HOOD primarily through retail trading,” the research notes.

Needham also underscores the practical applications of meme coins beyond speculation. Platforms like Coinbase (NASDAQ: COIN) and Robinhood (NASDAQ: HOOD) have seized on this trend, incorporating meme coins into their trading offerings. This strategic move has revitalized their retail trading volumes following a period of waning interest.

“We anticipate net revenue of over $50 million from this segment for COIN in ’24 and over $300 million in our bullish scenario,” it further explains.

Coinbase’s ‘Base chain’ has particularly thrived amid this surge, emerging as a key hub for meme coin launches and anticipated to yield substantial revenue gains in 2024.

Furthermore, the utilization of Bitcoin’s network for launching memes and NFTs has opened up a new revenue stream for Bitcoin miners. The uptick in transaction fees associated with these activities is helping offset the reduction in new Bitcoin issuance post-halving.

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