Why are PEPE and Meme cryptocurrencies in fashion in 2023?

In 2023, the cryptocurrency world experienced another bullish cycle. Or, according to some, an upward correction within a down cycle. Be that as it may, Bitcoin (BTC) and cryptocurrency prices have increased significantly since January 1st.

Memecoins (cryptocurrencies and tokens inspired by popular memes and online communities) are attracting a lot of attention. At the time of this publication was The reflectors point to PEPE, an Ethereum token with no intrinsic value or technological contributionwhose logo is inspired by the famous frog.

As CriptoNoticias reported, the price surged more than 6,000% in two weeks and many took the opportunity to cash in. Also, many (probably most) have lost money.

What is driving the price dynamics of these coins? And why are they so attractive to the market? Let’s look at a few factors.

Domino effect

In every up cycle of the cryptocurrency market, the same pattern seems to repeat itself. First, bitcoin (BTC), ether (ETH) and the larger cryptocurrencies are increasing in price. Then, Investors appear dissatisfied with earnings and are shifting their capital to less rated currencies. Due to the low market capitalization, volatility is high. Relatively small purchases are enough to change the price significantly in percentage terms. Memecoins like PEPE or FLOKI fall into this category.

psychological factors

After understanding the above, the question arises: Why can memecoins have a much higher value than cryptocurrencies and tokens from “reputable” projects in these upcycles? There are several possible answers that are not mutually exclusive and obey each other Factors related to human psychology:

novelty effect: Due to their humorous and unique nature, memecoins tend to pique people’s interest due to their novelty. Novelty is powerful psychological motivator This can generate excitement and curiosity, prompting people to explore and pay attention to these cryptocurrencies.

Attention Bias: According to the portal specializing in marketing Pipedrive, “A cognitive bias is a pattern that causes us to lose logic when making decisions.” One of these biases is attention. This is a psychological phenomenon in which people tend to focus on interesting or unusual information rather than less interesting information. Memecoins, with their quirky names and logos, can attract more attention and create greater persistence in collective memory than the more “serious” altcoins.

social influence: Have you read on Twitter that there are hashtags like #ShibaArmy (SHIBA’s army) or #PEPEArmy (PEPE’s army)? Or have you seen that there are “communities” dedicated to a specific memecoin on Telegram, YouTube and other networks? human psychology is heavily influenced by the actions and opinions of others. If online communities and social networks get excited about memecoins, others could be persuaded to join the movement and take a similar stance towards these cryptocurrencies. This herding behavior can increase the popularity and attention memecoins receive.

Entertainment factor (or gamification): Due to their humorous nature, memecoins can provide an entertainment factor that more serious coins don’t have. inside website From a business school you can read the following, which although designed for other types of niches, is perfectly applicable to cryptocurrencies:

Man has always liked games. In fact, they are present in our lives from a young age because they are the best way to learn, to share, to interact with people, to tolerate failure, etc. (…) And that’s how business gamification (aka gamification called). The technique that consists of applying game mechanics to make using a product or service more attractive and fun. This is the technique used to stimulate user interaction with the brand.

The Power Business School

The idea of ​​investing in something that is both an investment and a form of entertainment may appeal to some people. Take a look for example this tweeter Comparing different currencies based on how funny their memes are:

Optimism Tendency: The success stories surrounding some memecoins can create the illusion that investing in them could yield big returns. This cognitive bias, known as “Optimism Bias» can lead people to overestimate the chances of success and ignore the risks involved in investing in memecoins.

The role of the media

Media coverage (both in the cryptocurrency trade press and mainstream media) plays a key role in the perception and acceptance of memecoins in the cryptocurrency market.

When memecoins appear in well-known and reputable news sources, gain an air of legitimacy and credibility. Investors could interpret this coverage as a sign that the memecoin in question has potential and deserves attention, which may result in an increase in demand and ultimately its price.

Additionally, media coverage is expanding the reach of memecoins beyond social media and online communities. When stories about memecoins reach traditional media such as television, radio or newspapers, their visibility increases significantly. This can lead to increased interest from investors who might otherwise not be exposed to these cryptocurrencies.

Some media can Use catchy headlines or over-the-top stories to attract readers and viewers.

These tactics create undue excitement around memecoins, which in turn can affect their price and volatility in the market.

The “crypto” influencers

Influencers, especially on platforms like YouTube and Twitter, are playing an increasingly important role in the cryptocurrency ecosystem, including memecoins.

They have the power to make memecoins visible that might otherwise go unnoticed. Through funny tweets, informative videos and market analysis, These influencers can draw their audience’s attention to a specific memecoin.

on the part of the audience It is important not to be naive. Some influencers receive compensation for promoting a specific cryptocurrency or token. This fact can cloud your objectivity and lead to biased recommendations that do not reflect the coin’s true value or potential.

Additionally, influencer promotion of memecoins can contribute to the volatility of these coins. With thousands or even millions of followers, a single tweet or video from an influencer can cause a memecoin’s value to fluctuate drastically.

And let’s not forget that a YouTuber’s business, for example, is mainly based on the number of views they receive. For this reason, You may be saying what your audience wants to hear instead of doing a careful, objective analysis.

A call for personal responsibility

The cryptocurrency market is the maximum expression of capitalism and the laissez faire financially. In this context, Personal responsibility is fundamental.

Memecoins impress with their ability to capture the zeitgeist: a mix of humor, technology and a desire to belong to a community. While this spell can be a powerful force, it’s also important to remember that this isn’t a game. It’s about money. Buying a memecoin (like any other financial asset) is a serious financial decision that can have dire consequences.

Both new and experienced investors should exercise caution when entering the memecoin market. Everyone should do their own research, understand the risks involved and never invest more than they are willing to lose. It’s also important to be wary of promises of quick and easy success, and to remain skeptical of influencer endorsements and headline news.