As Bitcoin investors came to believe that spot Bitcoin ETFs are just around the corner they bid the price up significantly. Meanwhile, meme coins soared as well. What do meme coins have to do with Bitcoin? For that matter what do they have to do with ETFs? The rationale for Bitcoin going up in price is that interest will soar when investors do not need to use the blockchain to make investments. So far we have seen nothing about exchange traded funds for Pepe the Frog or any other meme coin.
Meme Coin Rally Exceeds That of Bitcoin
Between October 12 and October 26 of 2023 Bitcoin soared from $26,750 to $34,611. This rally was based on expectations of spot Bitcoin ETFs receiving approval from the Securities and Exchange Commission. Meanwhile, crypto memes outperformed Bitcoin itself with a 77% price increase by Pepe Coin. The price increase of Bitcoin makes some sense to us. However, it is still not clear whether or not the SEC will abandon its stance that Bitcoin trading is dangerous. The rally of Pepe coin and the rest of the crypto memes only makes sense as a fad that comes and goes.
What Will Spot Bitcoin ETFs Do for Bitcoin?
A viable rationale for why Bitcoin has soared recently is that spot Bitcoin ETFs will raise interest in the token. There are people who are hard core crypto true believers who buy and sell Bitcoin. And there are folks who are simply in the game to make money. It makes sense that a lot of folks with no special interest in the blockchain, decentralized finance, or NFTs would invest in Bitcoin if it were easier to do. That is, they would buy shares of an ETF that tracked Bitcoin when that did not entail having a crypto wallet or worrying about being hacked. The total worth of all crypto is about $500 billion. The total invested in all exchange traded funds is about $10 trillion. It is a rational argument to say that by making it easier to invest in Bitcoin that more folks will buy and sell and the price of Bitcoin will go up. That argument does not really apply to meme coins.
Why Are Meme Coins Popular?
At the start of 2023 meme coins rallied and then prices fell again. Now we see prices going up again. Will they repeat their previous performance and drop back? An aspect of meme coins that Bitcoin, Ether, and the rest do not have is that they are fun. They are silly and fill a YOLO, you only live once, niche in life. Meme coins make sense to folks who do not trust regular money and, perhaps, do not trust crypto itself. If the future is uncertain and you cannot trust anyone, at least you can have a good time and even make a profit. An interesting comment about meme coins is that they are cultural commentary with monetary value to boot.
Why Did Ether and Cardano Prices Rise?
In the stock market they say that a rising tide raises all ships. That is to say, when enough stocks go up in price it looks like the whole market is going up all together. Naïve investors mistakenly jump in and buy stocks that have not gone up “yet.” They mistakenly believe that they are being smart and buying before the market catches on. Unfortunately, these stocks are only going up to the extent that more native investors are buying them. The smart ones will be selling and taking a profit. This thought came to us when we saw that both Cardano and Ether prices went up at the same time that Bitcoin (and the meme coins) rallied. Enthusiasm can be contagious, but it is not necessarily a reliable guide to investing in cryptocurrencies or anything else for that matter.
What Do Meme Coins Have to Do With Bitcoin? – DOC
What Do Meme Coins Have to Do With Bitcoin? – PDF
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