Why can Musk's frequent naming of "Memecoin", which has skyrocketed and plummeted, become a new opening in the currency circle?

Interface News Reporter | Si Linwei

Recently, the cryptocurrency market centered around Bitcoin and Ethereum has not experienced significant fluctuations, but the price of an air currency called "PEPE" has plummeted by more than 60% in a week, with its market value reduced to approximately $560 million.

It is worth noting that before the sharp drop, this "Memecoin" named "PEPE" also created a speculative myth in the coin circle.

The so-called "Memecoin", literally translated as "meme coin", is a type of currency in the currency circle, referring to some counterfeit tokens that have no fundamental value compared to mainstream currencies. But compared to ordinary air coins, "Memecoin" has its own differences. They often have a simple and clear narrative logic, are topical, and can attract public attention. They have great popularity on social media, with the most typical representative being "dog coins".

Dog Coin was once a hot topic in the 2021 coinage bull market and became one of the hot topics on Twitter with the support of Tesla CEO Elon Musk. But now, the "PEPE" with the classic frog emoticon pack as its image is becoming the new generation of "dog coins".

In early April of this year, Twitter user @ PEPCointh posted a photo of a green frog wearing a red hat with the words "Make Memecoins GreatAgain" imitating former US President Donald Trump's presidential election slogan. On its official website, the phrase "The era of dog coins has passed, and the most popular meme coin now is Pepe" is particularly eye-catching.

Two weeks later, PEPE coins were issued, with a total circulation of 420.69 trillion pieces. Benefiting from its widely circulated emoticon image and simple and crude coin circle narrative on the internet, PEPE experienced a trading boom, soaring 1000 times in just 4 days and reaching its peak on May 6th, with a total market value exceeding $1.7 billion. Even after a week of sharp decline, according to CoinMarketCap data, the total increase in PEPE so far has exceeded 2779%.

Such a crazy increase has naturally attracted the attention of coin circle users, and cryptocurrency trading platforms led by Coin An have also timely launched PEPE trading to meet the trading needs of coin speculators. In addition, a large number of new "Memecoins" are beginning to emerge, attempting to replicate the hotspots of PEPE.

And every time "Memecoin" explodes, Musk's figure is naturally indispensable. His social media has become a weather vane for 'Memecoin', and any emoticons he has posted or mentioned will usher in a wave of hype. For example, on May 13th, when Musk tweeted and attached a PEPE image emoticon pack, market data showed that the price of PEPE immediately increased by about 10%. On May 11th, Lookonchain data showed that after Musk released a tweet about Milady (LADYS), the prices of memes related to the Milady series NFT increased significantly.

But in the wild growth of the "Memecoin" craze, some obvious on chain behaviors suspected of insider trading have also been discovered, such as KOLAnApe's Prologue discovering some wallets in the coin circle, successfully earning over $9 million at a total cost of 0.61 ETH (approximately $1210). However, through on chain data analysis, these addresses can always buy at perfect times, and even after a significant increase of 1000 times, they still hold nearly 10% of the total circulation of tokens in their wallets.

The hype about memes is usually exciting, but then there is often a market crash, similar to what we saw on Dogcoin and Chaigou two years ago, "CoinDesk quoted Youwei Yang, the chief economist of listed company BTCM, as saying.