Racism and Crypto: What's Up With Memecoins Lately?

The memecoin market has evolved from being a dark corner of crypto to a thriving market all its own. You have probably heard of some larger and more famous memecoins, $TRUMP, $DOGE, $SHIBA, and the like, but we want to take a moment to discuss what goes on in “the trenches.”

Recent events have surprised and even disgusted the most seasoned traders. Considering one of the driving sentiments behind the crypto market is financial independence and freedom to transact without government intervention, we have to ask ourselves: “Is this level of freedom good for the market as a whole?”

“The Trenches,” akin to a term used in warfare, is where traders explore the most volatile sector in crypto. We’ve previously referred to it as the “casino of crypto”. Unlike the already established memecoins you might find on CoinMarketCap, the trenches offer an unconventional and extremely fast paced style of trading where you have the opportunity to invest in newly created tokens starting around ~$4,000 market cap. That’s right $4K, we didn’t forget any 0s.

You think altcoins are too volatile? Try skimming past a shitcoin called Unicorn Fart Dust and wanting to off yourself after you missed a 1000x opportunity; this happens daily in the trenches. However, investors can just as easily buy something they think is eye-catching, and lose 90% of their investment in seconds if they’re not careful.

A vast majority of the time, these tokens will not be tied to any promising technology or startup, but simply an engaging meme, narrative, or recent event.

For example, during the recent livestream of Trump’s meeting with Ukrainian President Volodymyr Zelensky, dozens upon dozens of memecoins were being created in real time with names like $ZEWENSKY and $FATJDVANCE.

A small percentage of them got enough engagement from the community to make a run into the 6-figure range, before inevitably dropping back down to their “true value” of pretty much nothing.

The meme and ticker pretty much speak for themselves. The important thing to note here is that this token marked a peak market cap of about $350K, at which point those lucky enough to catch it early made exponential profits. To quantify, a trader who invested at $10K market cap and sold at $350K made 35x their investment.

Trenchers will even see coins run into the millions regularly. Wipe the drool, being early is not as easy as it sounds, and getting liquidated is much easier than turning a profit. The fact is, in order for you to gain on your investment someone else has to buy after you and act as your exit liquidity.

It seems that scams and bigotry have found a home in the memecoin sector. One of the biggest problems in this space is that there is no deterrent for malicious activity, and it begs the questions why this is allowed, and why people are pouring real money into it. The short answer seems to be that profits are still profits no matter the means of acquisition.

Anyone can create a token and then rug pull within seconds. The process is very easy and accessible, we’re not going to get into it now. There are tools and strategies you can use to help identify the rug pulls waiting to happen, but in some situations there’s not much you can do to avoid it.

$LIBRA has entered the chat.

In a market that runs on narratives, a coin backed by a person of influence is sure to garner buyers. When $LIBRA coin was first discovered and tied to Argentina, trenchers moved quickly to verify its authenticity, and they found exactly what they hoped for. Argentinian President Javier Milei had posted about the coin on his socials, saying it would help bolster the country’s economy and support small business.

What other proof would an investor need at a moment’s notice? You have a coin with a market cap in the lower billions, a president vouching for its creation and utility, and a global community buzzing within minutes of its discovery.

Within an hour of launch, $LIBRA had established a market cap of $4 billion with no signs of slowing down. We were still early. When considering the life of a typical memecoin, an hour is way more than enough time for a coin to hit a peak and revert back to 0, but the buy volume and narrative here was reminiscent of some of the biggest memecoins to date. Even $TRUMP had taken almost 2 full days to reach its peak of $77 billion.

At first glance, this had all the makings of a 100 billion dollar project. Unfortunately for investors, the first glance didn’t tell the whole story. Shortly after reaching its peak of $4.6 billion, an unprecedented amount of sales volume poured in.

How could this be? Are investors really this short sighted? This is a coin being backed by a whole government… WTF. After hitting its peak, it took about 20 minutes for $LIBRA to lose ¾ of its total value; about $3 billion dollars was wiped from the market in that time.

Traders watched their funds evaporate in red candle after red candle, and eventually realized that President Milei had deleted all posts related to $LIBRA from his social media. Reality was starting to set in. Traders all over the world had just been rugged by a president.

As reported in this Business Insider article, Observatorio del Derecho a la Ciudad, a nongovernmental organization in Argentina, estimated losses over $4 billion worldwide. The article also describes some of the legal action taken against President Milei, but it doesn’t seem like any real consequences have been felt yet.

The below video shows an hour long interview between youtuber Voidzilla and Hayden Davis, one of the alleged funders and beneficiaries of $LIBRA. At about the 18 minute mark, Hayden Davis is asked to answer about the sniping of $LIBRA by wallets linked to founders.

They’re probably not actually racist, but what’s with all the Nazi memes and n-word coins? To even laugh about it feels like going too far sometimes, let alone consider an investment. Most people probably agree that even playfully spreading sentiments like these cannot be a positive thing, and more importantly, cannot be taken seriously by investors.

With that said, even if coins like these gain traction for a short time, and you make some money on them, it’s hard to make the argument that they have a positive impact on the market. Sure, you might be able to say that it’s within the free spirit of crypto and the market will speak for itself, but there’s just really no positivity to draw from bigotry.

While we’re not going to start listing off all the wild narratives we’ve seen run into the millions, let’s take a moment to talk about how the recent Ye saga might be affecting the market and the minds of investors.

If you’ve been following along, you know that Kanye West may have secretly launched a memecoin. At the time this article was written, $YZY had been the prime suspect of Ye’s stealth launch, but recently we’ve seen another coin steal the spotlight, and unfortunately, it has Ye written all over it.

The original $YZY ticker was tied to a token named Yeezy Coin. There’s been a lot of buzz in the community about this coin for almost a month now, but nothing has solidified it as being actually tied to the man himself. Last week, another coin was created with the same $YZY ticker, but named Swasticoin.

Ugh, we miss the old Kanye.

Without speculating why Kanye may or may not be behind this, or what genius reason he may have for picking such an egregious name for his token, we ask you, the people… Is this really the direction you want to take memecoins?

It was all fun and games when $PEPE pumped to billions for no apparent reason, and we followed it up with the Boys Club featuring Pepe, Brett, Andy, and Landwolf, all with their own creations. Somehow swastikas and pointless celebrity tokens just don’t have the same effect. There’s nothing to build on here, no inspiration to be had.

It seems like traders are just getting into these not even funny memecoins because of the FOMO. They think that something that gets any media attention at all will make a run, and they’re usually right, but that doesn’t make it good. In truth, the liquidity that exists in something like Swasticoin would probably just be spread to other projects that don’t remind people of the ugliest parts of humanity.

The memecoin market certainly doesn’t need controversial content like this to thrive. The total market cap for this sector peaked at over $120 billion this past December. We’re currently hovering around $50 billion in what are considered to be historically bad market conditions, so memecoins aren’t going anywhere.

The market will only grow through further refinement and development of new ideas. The more tokens prove to show some sort of utility or community, the easier it will be for serious investors to get involved.

You might want to stick to your freedoms and let crypto communities be as unhinged as they want, but when you start considering what really makes a market, swastikas and n-word coins are not going to make the cut. It’s a hard sell, and if not for the indirect endorsement from some of the biggest personalities alive, they wouldn’t sell at all.