At the same time, the meme coin market is experiencing a downturn. Failed launches and insider trading have undermined confidence in these assets.
Investors are Losing Interest in Meme Coins
The once rapidly growing meme coin market is now experiencing a serious decline. Investor confidence has been significantly shaken after a series of unsuccessful launches and high-profile rug pulls. CoinGecko co-founder Bobby Ong says that activity in the sector has decreased significantly.
In a recent report from early March, Ong analyzed the situation in detail, pointing to the failed launch of LIBRA, a token associated with an Argentine President. Its collapse caused shock in the market and severely impacted a platform, where meme coins were launched. The number of new tokens on the platform has fallen significantly.
At the beginning of the year, the meme coin market was at its peak, especially after the emergence of tokens dedicated to a former President of the United States and his wife. They quickly gained popularity, but according to Ong, the decline began with their launch. Liquidity began to decline, and interest in meme coins gradually waned.
The launches of those tokens attracted enormous interest, but their effect on the platform was devastating. In mid-January, it recorded a record amount in weekly trading volume, but by the following month, this figure had fallen considerably.
The total capitalization of meme coins reached a very high valuation, but now the figure has decreased. In a few months, the market has lost a significant portion of its value.
Although the launch of those tokens was the peak of interest in meme coins, Bobby Ong believes that the failure of Libra ultimately destroyed this segment. Insiders withdrew a large sum of money in just a few hours, which led to Libra collapsing dramatically.
Meme Coins are Declining
Despite the collapse, Bobby Ong is confident that meme coins will not disappear completely. He believes that these assets are ”seasonal” in nature, meaning that their popularity comes and goes in waves. History shows that most meme coins eventually lose relevance, but some still stay afloat and find their place in the market.
Analysts have also noticed that investor interest is gradually shifting from meme coins to more reliable assets. Many traders are returning to Bitcoin, Ethereumr, and other major coins.
Ong suggests that most tokens will depreciate, and only a select few will retain value. He cites Dogecoin, Shiba Inu, and Bonk as examples, noting these projects have survived more than one crisis and continue to exist because they were able to create a dedicated community.
Bobby Ong believes that meme coins that have survived market downturns share one important feature: an active and dedicated community. Unlike tokens that appear on a wave of hype and disappear just as quickly, DOGE, SHIB, and BONK have managed to create a dedicated community. Their holders continue to support projects even during crises, which allows these meme coins to stay afloat.
New York Tightens Fight Against Crypto Fraud
New York authorities have decided to strengthen the protection of investors from crypto scammers. Local legislators have introduced a new bill aimed at combating rug pulls, schemes in which developers suddenly leave a project, taking investor’s money with them.
In early March, an Assembly member proposed a bill which outlines new criminal penalties for cryptocurrency fraud. The law also introduces clear definitions of which schemes are considered criminal, which will give police and courts more opportunities to bring fraudsters to justice.
Regulators are Trying to Understand Meme Coins
There are more and more scams with meme coins, and the authorities are having increasing problems. Such projects often operate in a gray area, so it is difficult to bring their creators to justice. A co-founder believes that regulators should more harshly punish insiders and those who organize ”rug pulls”.
The main difficulty is that the blockchain allows anonymous transactions. Money can be quickly transferred between different networks, and even with advanced tools, it is not easy to track down fraudsters. Some platforms are introducing additional transparency measures, but this does not completely solve the problem.
If New York adopts that bill, it could set a trend for other states. This region has been regulating the crypto industry for a long time, and a particular license has become one of the first serious licenses for crypto companies.
However, balancing between protecting investors and developing the industry is not easy. Honest projects are ready for regulation, but if the authorities go too far, the crypto business will start to move to other countries where the laws are softer.
Regulators are likely to keep a closer eye on celebrities advertising crypto. The recent surge in tokens associated with a former President of the United States has already raised many questions.
This article was originally Posted on Coinpaper.com
