Memecoin: From a joke that changed the crypto market to a serious speculative strategy

Memecoins have ceased to be an internet anecdote to become a financial phenomenon with tens of billions in market capitalization. But what is really behind these assets that were born as a parody? In this guide, we will cover the essential aspects that every investor should know before venturing into the memecoin universe.

▶ The memecoin phenomenon explained from its roots

When we talk about memecoin, we refer to a type of digital token whose value does not come from a revolutionary technological proposal, but from widespread adoption and community sentiment. Unlike projects like Ethereum or Solana that offer utility and concrete use cases, memecoins seek to generate demand through virality and the enthusiasm of their followers.

The concept was born in 2013 when Billy Markus and Jackson Palmer created Dogecoin, initially as a satirical critique of the speculative crypto boom. What started as an educational joke turned into a global movement. The community built around DOGE various initiatives: social media challenges, sports sponsorships, philanthropic campaigns. The result was that DOGE reached a market capitalization that exceeded the GDP of several countries.

More recently, the market has become more sophisticated. Competitors like Shiba Inu (SHIB) emerged, not only replicating the model but adding real functionalities: DEX, games, ecosystems. Today, hundreds of memecoins are in circulation, though only a handful concentrate most of the volume and liquidity.

▶ The two sides of volatility: opportunities and traps

What characterizes memecoins is their erratic behavior. A tweet from a public figure can spike or crash the price within minutes. This extreme volatility presents both opportunities and risks.

Why some investors take advantage of it:

Memecoins are perfect for intraday or weekly trading. Their sensitivity to news and social media movements generates detectable signals for active traders. The accessible price — many quote in fractions of a cent — allows entry with small capital. Additionally, the segment continues to generate new launches constantly.

Why others lose money:

Without a serious underlying project, most memecoins lack medium-term prospects. Many are potential rug-pulls: projects quickly assembled to attract speculative capital and then disappear. The HODL strategy (buy and hold) is practically unviable in this segment. Moreover, outside DOGE, SHIB, and very few others, most meme tokens are only traded on specific DEXs like PancakeSwap, adding complexity and risk.

▶ The current market state: data that matter

According to current data (December 2025), the memecoin landscape looks like this:

Dogecoin (DOGE) remains the undisputed leader with a quote of $0.13 and a market cap of $21.61 billion. Shiba Inu (SHIB) follows in second place. Baby Doge Coin (BABYDOGE) trades around $0.00 with a market cap of $101.90 million.

The gap between the top and the rest is enormous. The “whales” —major holders— hold disproportionate power, meaning that specific movements can trigger extreme volatility.

▶ When does it make sense to include memecoins in a portfolio?

Modern portfolio theory suggests diversification by asset class and time horizon. An investor with long-term positions in traditional assets or yield-generating stablecoins can use memecoins to generate short-term gains by exploiting their sharp movements.

For example: while Tether (USDT) remains stable generating interest via staking, DOGE accumulates oscillations that an active trader can monetize. Over the past 12 months, the volatility difference between the two assets has been colossal.

Memecoins are, essentially, the crypto equivalent of penny stocks: cheap assets, highly speculative, with potential for rapid movements but also devastating losses.

▶ Practical guide: how not to ruin yourself buying memecoins

If you decide to venture into this territory, these principles are non-negotiable:

First: Don’t confuse likability with value. Just because the token has an adorable mascot or a popular character doesn’t generate profitability. That emotional effect is precisely what scammers exploit.

Second: Analyze the community before investing. Check Twitter, Discord, Telegram. How many active users are there? How frequent are the posts? A weak or declining community is a red flag.

Third: Master your risk levels. Set Stop Loss and Take Profit according to the token’s historical volatility. A typical 10% move is different from a 50% one.

Fourth: Leverage should wait. Your first contact with a memecoin should be “flat” (without leverage), just to learn how to handle its behavior. Once adapted, you can consider advanced tools.

Fifth: Monitor news and whale movements. Memecoins often go through launch processes, large purchases, or developments that significantly impact the price in the short term.

▶ Where and how to buy memecoins

There are two ways: centralized exchanges (CEX) and decentralized exchanges (DEX).

On DEXs like PancakeSwap, you’ll find a wider variety of memecoins, but it requires an extra step: first buy BNB or ETH (bridge coins), then swap for the memecoin you want. This involves two fees and double exchange risk.

For DOGE, SHIB, and the main ones, a traditional CEX is simpler, faster, and safer. Here, you can operate with additional tools: short positions, stop loss, take profit, all from a single reliable interface.

▶ The reality of memecoin as an investment

Memecoins will persist as long as there are communities willing to speculate. They will never replace fiat nor become a store of value, but that was never their purpose. Their utility lies in being short-term assets that generate gains through volatility.

The key is to accept this reality: you are not “investing” in the traditional sense, you are trading a speculative asset. With that clear mindset, memecoin can be a valuable tool to diversify strategies and generate short-term returns while the rest of the portfolio develops over longer horizons.