Memecoins, cryptocurrencies inspired by memes, have gained popularity, and several analysts doubt their legality. Renowned cryptocurrency analyst Benjamin Cowen has claimed that the “strong community” concept behind these coins’ founders serves their founders more than their communities and is, therefore, “garbage.” He pointed out that the same gang creates most of these coins and pumps and dumps them until they are no longer profitable.
Cowen’s remarks come when Shiba Inu ($SHIB) and Pepe Coin ($PEPE), more well-known for their internet meme roots than any technological advancement, have acquired broad popularity. Pepe Coin’s market has experienced incredible growth despite allegations of possible insider trading. One investor turned a 0.125 ETH investment into $1.14 million in just a few days.
Leading exchange Binance, however, warned prospective investors that PEPE lacks any built-in utility or value support mechanism and that its contract owner may change transaction costs and ban features. Despite the dangers, memecoins like Dogecoin ($DOGE) and Shiba Inu are widely used as payment methods and have a market valuation of over $16 billion.
Investors are at tremendous risk due to the rise of memecoins, especially those unfamiliar with cryptocurrency. Cowen’s concerns regarding the authenticity of these coins are genuine because many people who purchase them wind up underwater. Despite the necessity of taking profits and returning the initial investment, confident investors risk turning into “exit liquidity” regardless of how strong the coin’s community is.
In conclusion, despite the popularity of memecoins like PEPE, investors should proceed with care and due diligence. The cryptocurrency sector must also devise methods for separating useful coins from those made only for profit. Investors must remain vigilant and knowledgeable as the cryptocurrency market changes to prevent severe losses.
