Memecoins Unlikely to Drive the Next Bull Market

September 02, 2024 02:14 PM AEST | By Team Kalkine Media

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Memecoins Unlikely to Drive the Next Bull Market — Image source: shutterstock

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For those seeking to drive the next bull market cycle, attention should shift from memecoins to more sustainable areas such as real-world assets (RWAs) and artificial intelligence (AI). Despite the impressive growth of memecoins this year, which stands out in a market otherwise characterized by stagnation, they may not be the most reliable foundation for long-term market expansion.

Memecoins, which include prominent examples like Dogecoin and {Shiba Inu} (SHIB), have experienced substantial growth in 2024.This growth has been driven by high speculative activity and notable endorsements from celebrities. According to a June study by Binance, memecoins saw a nearly 600% increase in value year-to-date, significantly outperforming Bitcoin. This surge has been fueled by short-term speculation and social media hype, leading to rapid, but unsustainable, liquidity inflows.

However, the long-term sustainability of memecoins is questionable. A significant number of these tokens lack enduring value, with reports indicating that approximately 97% of memecoins created have vanished, and over 2,000 new tokens are disappearing monthly. This raises concerns about their viability as a foundation for sustained market growth.

In contrast, sectors such as RWAs and AI present more promising prospects. Tokenizing real assets like real estate, fine art, and collectibles offers a stable and substantial basis for market development. This process integrates tangible value into the blockchain ecosystem, providing a more secure and practical form of liquidity. Additionally, the AI sector is poised for significant growth, with projections estimating it will reach $297 billion by 2027 and achieve a compound annual growth rate of 19%.

By focusing on these areas, the cryptocurrency market can move beyond the short-lived excitement of memecoins and build a more robust foundation for future growth. Real-world assets and AI-powered projects have to deliver sustainable advancement and drive the next major market rally.

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