Meme
coins
have
received
a
high-risk
score
from
Coin
Metrics
reports,
underscoring
the
increased
volatility
and
market
manipulation
within
this
market.
The
analysis
conducted
by
Coin
Metrics
aims
to
spread
awareness
of
the
speculative
nature
of
these
digital
assets,
urging
caution
for
investors
considering
jumping
on
the
meme
coin
bandwagon.
Report
Flags
Meme
Coins
As
High
Risk
As
the
meme
coin
market
continues
to
expand
rapidly,
extending
its
reach
to
a
broad
range
of
audiences
in
different
global
regions,
it’s
important
to
understand
the
various
risks
tied
to
these
digital
assets.
On
June
11,
Coin
Metrics,
a
leading
provider
of
crypto
financial
intelligence,
released
a
report
detailing
the
inherent
risks
associated
with
meme-based
cryptocurrencies.
In
the
report,
meme
coins
were
given
a
risk
score,
marked
by
a
high
Gini
coefficient
of
approximately
0.8.
The
Gini
coefficient
is
the
statistical
measure
of
economic
inequality
in
a
population.
It
evaluates
the
dispersion
of
income
or
distribution
of
wealth
amongst
members
of
a
particular
population.
A
Gini
index
of
0
represents
perfect
equality,
while
an
index
of
1
indicates
inequality.
In
the
context
of
meme
coins,
the
Gini
coefficient
can
be
used
to
assess
the
distribution
of
crypto
asset
holdings
among
different
wallet
addresses.
Coin
Metrics
0.8
evaluation
of
meme
coins
highlights
the
significant
investment
risks
tied
to
these
digital
assets.
The
crypto
platform
has
attributed
the
heightened
risks
of
meme
coins
largely
to
the
increased
concentration
of
token
ownership
within
the
meme
coin
market.
This
suggests
that
most
of
the
meme
coins
are
held
by
a
small
portion
of
crypto
investors.
These
investors
are
typically
called
“Whales”
or
large
token
holders
and
are
recognized
by
the
massive
token
transactions
and
holdings.
Coin
Metrics
revealed
the
impact
of
high
token
ownership,
indicating
the
potential
for
market
manipulation
and
liquidity
challenges
within
the
market.
In
addition
to
the
volatile
nature
of
these
coins,
which
in
itself
is
a
substantial
risk
factor,
a
high
Gini
coefficient
for
meme
coins
also
indicates
heightened
centralization.
This
increased
centralization
poses
substantial
risks
as
large
token
holders
tend
to
significantly
impact
a
token’s
price
when
executing
large-scale
transactions.
Coin
Metrics
has
urged
investors
to
remain
cautious
of
the
risks
tied
to
meme
coins,
highlighting
the
need
for
careful
consideration
when
evaluating
these
coins.
The
crypto
platform
has
also
encouraged
investors
to
assess
the
stability
of
these
tokens
by
understanding
their
market
dynamics
and
activities
before
investing
in
them.
The
Growth
Of
The
Meme
Coin
Market
According
to
the
Coin
Metrics
report,
as
of
June
2024,
the
meme
coin
sector
has
grown
to
a
market
capitalization
above
$60
billion.
This
market,
which
is
characterized
by
coins
based
on
humorous
characters
and
animals,
has
grown
considerably
since
its
inception.
While
the
market’s
growth
may
be
primarily
attributed
to
the
speculative
nature
of
meme
coins,
investors’
interest
and
demand
for
meme
coins
remain
high.
Some
of
the
most
popular
meme-based
cryptocurrencies
such
as
Dogecoin
(DOGE),
Shiba
Inu
(SHIB)
and
Pepe
(PEPE)
have
been
the
face
of
the
market,
expanding
rapidly
over
the
years.
Newer
coins
like
Dogwifhat
(WIF)
and
Book
of
Meme
(BOME)
have
also
been
taking
the
market
by
storm,
reaching
a
market
capitalization
above
$2.6
billion
and
$691
million,
respectively,
in
less
than
a
year.
On
the
other
hand,
Dogecoin,
Shiba
Inu
and
Pepe
are
three
of
the
most
popular
and
largest
meme
coins
in
the
market.
Currently,
Dogecoin’s
market
capitalization
has
exceeded
$20
billion,
while
Shiba
Inu’s
stands
at
over
$13
billion.
Pepe’s
market
value
has
also
risen
as
high
as
$5.5
billion,
according
to
CoinMarketCap.
Combined,
these
three
popular
meme
coins
soared
to
a
remarkable
market
value
of
$100
billion
in
2021.
price
recovers
|
Source:
DOGEUSDT
on
Tradingview.com
Featured
image
created
with
Dall.E,
chart
from
Tradingview.com
Go to Source
Author: Scott Matherson
