Friday, December 3

Shiba Inu and Dogecoin, is it worth investing in meme cryptocurrencies?


If we’re honest, it has to be admitted that 10 of the top 30 cryptoactives in market capitalization are memes, clones, or projects that never sought decentralization or innovation. These range from the friendly Shiba Inu (SHIB) and Dogecoin (DOGE) puppies, to the centered copies Binance Coin (BNB), BCash (BCH) and Tron (TRX).

You don’t have to be a programming expert to know that Binance Smart Chain is a more centralized version of Ethereum, and even the token standard nomenclature has been copied from ERC-20 to BEP-20.

memecoins

However, there is one factor that unites these cryptos demarcated above: marketing. In some cases, like XRP, the responsible company has a President, Chief Financial Officer, and tens of thousands of dollars for partnerships and advertising.

You’ll probably say that Dogecoin is an exception, but that’s because you arrived in this market after 2015. The fame of this cryptocurrency meme started with an alleged sponsorship of the Jamaica bobsled team, and then with a relevant exchange sponsoring a Jamaica racing team. Nascar, USA.

After all, is it worth investing in meme coins?

The only way to know the answer is to measure the return of this “basket” of meme coins against the others. To eliminate the impact of general market movement, we will use the 3-period average: sideways, bullish, and bearish.

Below is a graph of the total market capitalization, in addition to the 3 60-day periods demarcated. No doubt, it is expected that during the rally, meme currencies will show a much stronger rally, although they will suffer from correction periods.

Capitalization
Capitalization

The table below shows us, in the initial period of lateralization, the meme currencies were 20% behind. Even if we exclude the worst case, the 69% drop in BNB, this average still remains at negative 17%.

coins meme lateralization
coins meme lateralization

In the 60-day period ending Feb 15, we had 3 of the 8 largest meme coins outperforming the 160% return on total crypto capitalization. Even if we exclude the incredible 1.755% return on DOGE, the average would be 200%, a good slack for the general market.

Finally, during the downturn, we had a difference of only 8 percentage points. Although slightly worse for the basket of the 8 biggest meme currencies, it is not significant compared to the gain in the previous period, which was higher.

Is the secret to diversify between memes?

Very likely, because finding which of the 8 would have the best performance is very difficult. Diversification, that is, choosing several assets within a basket, is the best strategy for those who do not have control in a certain area.

I’m not supporting the thesis that meme cryptocurrencies are a good investment. It may have been in the last 15 months, but there is no guarantee that this phenomenon will be repeated. So be wary of getting into those shitcoins!





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