Billion Dollar Memes
"Nothing so undermines your financial judgment as the sight of your neighbor getting rich." J.P Morgan
When most people in the investment world mention cryptocurrencies, it is usually Bitcoin or Ethereum. But the cryptocurrency market, according to Monday’s CoinMarketCap data, is $3.58 trillion (a number slightly higher than the value of all the stocks trading on the London Stock Exchange). Bitcoin is worth roughly $2 trillion, and Ethereum is worth another $400 billion. That means other coins collectively have over $1 trillion of market value.
A large portion of those are meme coins like those in the list above. A popular one recently was Fartcoin. As I write, it is the 56th largest cryptocurrency with a market value of over $2 billion.
And before you ask, “What does Fartcoin do?” The answer is nothing. None of the meme coins do anything. But people are betting huge amounts of money that the prices will rise, and they will be able to sell to a greater fool before the prices go back down.
You may have heard that Trump and Melania created meme tokens before the inauguration. As I write, the Official Trump Coin is trading at around $8 billion. If this price were to hold until all coins could be issued, the value would be $40 billion.
It is modern-day alchemy.
And lest you think this is a highly niche market, look at the volume numbers in the pictures above. Trump’s coin had $38 billion in trades over a 24-hour period. Fartcoin had $700 million over the same time.
If you are still reading and thinking, “This can’t be real?” I highly encourage you to check out this Wired article, The Madcap Rise of Memecoin Factory Pump.Fun
Pump.Fun [is a] a platform for launching memecoins, a type of crypto coin whose value rises and falls in line with the popularity of the memes it references.
The platform went live in January 2024. In the 12 months since, it has been reported by third parties to have brought in more than $350 million in revenue through a 1 percent cut of trades.
Investments that require a greater fool always end poorly. I don’t know whether it is days, months, or years, but one day, I have a strong feeling a lot of people will look back and regret going all in on Fartcoin.
Will these meme coins impact the broader crypto market? Probably. When the dot com bubble crashed, Amazon lost 90% of its value. When things turn and people get scared, they can’t distinguish good from bad. They just sell. I am by no means a crypto expert, but everything I’ve read in history books seems to indicate that when a trillion-dollar market blows up, other stuff gets blown up as well.
I could write 10 notes per day about absurdities in the crypto markets, but the topic is so far outside the scope of what we do for our wealth management clients that it probably wouldn’t be helpful or enjoyable for anyone but myself. I’ll try to limit my comments on the topic to one mention every couple of months.
However, if you ever want to discuss absurdities (or tell me why meme coins aren’t absurd), shoot me an email. I truly love this stuff.
Personal note:
This past weekend, we took a company/family retreat to Kalahari Resort. It was an amazing time.
After a stop in the arcade, our kids would likely describe gambling as “very fun, something they would like to do every day, and an easy way to win prizes.”
When it comes to writing about investments, the disclaimers are important. Past performance is not indicative of future returns, my opinions are not necessarily those of TSA Wealth Management and this is not intended to be personalized legal, accounting, or tax advice etc.
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