Bitwise CIO Predicts End of Memecoin Supercycle

In 2024, memecoins were by far the most popular crypto narrative, capturing nearly 31% of global investor interest. However, due to recent developments, Bitwise CIO Matt Hougan believes they may fade away in the next six months.

In a Feb. 25 X post, Hougan said the crypto industry is currently witnessing the end of the memecoin boom due to recent events, such as the launch of pump-and-dump tokens MELANIA and LIBRA and the Lazarus Group’s $1.5 billion exploit of crypto exchange Bybit.

“The good news is there are already things ready to replace it, including the institutional adoption of Bitcoin, stablecoins, tokenization, and a rebirth in DeFi. But until they start making their presence felt, the loss of energy will create a drag on the market,” Hougan said.

Souring Sentiment

Sentiment surrounding memecoins has worsened over the past two months.

MELANIA, in particular, caused a stir among crypto enthusiasts after it was revealed that 88% of the token’s total supply had been allocated to insiders.

Shortly after its launch on Jan. 20, MELANIA surged to a valuation of $1.9 billion, making the value of the insider allocation around $1.7 billion. The token has dropped 93% since then.

Libra was an even bigger scandal, resulting in trader losses of $251 million, according to a Feb. 19 Nansen report. Meanwhile, it was recently revealed that the Lazarus Group was the Solana-based memecoin launchpad Pump.fun to launder some of its stolen funds.

Some major players in the crypto industry believe the recent wave of illegal activity within the memecoin sector could give regulators reasons to clamp down on crypto.

“Memecoins being tied to illicit finance gives regulators more ammunition, but enforcement won’t stop at just meme tokens. If anything, it makes security token enforcement easier while allowing retail speculation to burn itself out. The risk is overreach—regulators could use bad actors as justification to clamp down on broader innovation instead of focusing on targeted enforcement,” said Ben Kurland, CEO of crypto research platform DYOR.com.