In-depth Analysis of Memecoins Investment Strategies

In the cryptocurrency market, memecoins have always been a controversial but undeniable presence. This article will explore the investment value and strategies of memecoins from multiple perspectives.

The beta characteristics of Memecoins

Some memecoins are favored primarily because they have a high beta coefficient with respect to Layer 1 (L1) assets. This means that a moderate allocation to memecoins can achieve a leveraged effect on L1 assets without increasing leverage risk.

Taking a well-known memecoin as an example, when its 30-day beta exceeds the 90-day rolling beta, it often signals a significant upward opportunity. In this case, the 30-day and 60-day average returns of the memecoin reached 124% and 413%, respectively.

However, it is important to note that the explosive growth of memecoins often occurs in sync with the short-term rise of their corresponding L1 assets. For example, when a certain L1 asset increases by more than 5% within a week, the average return of the related memecoins is as follows:

• 1 Week Average Return: 26%
• 30-day average return: 141%
• 60-day Average Return: 512%

Nevertheless, the performance of L1 assets does not guarantee the excellent performance of memecoins. Statistics show that in about 1/3 of the cases, even if L1 assets rise, memecoins may still decline.

On-chain Data Analysis

In addition to price performance, on-chain data analysis is also an important tool for assessing the investment value of memecoins. Here are several key indicators:

1. Token Holder Growth Rate (90 Days)
2. Median and Average Holding Amount
3. The proportion of wallets holding value over $1000
4. The proportion of wallets holding value over $100k
5. Retention rate of large holders (who have held >$100k)
6. Net inflow/outflow of large holders to decentralized exchanges

These indicators help to understand the quality of the holder base and the strength of their beliefs.

Other Considerations

In addition to on-chain data, the following factors must also be considered:

• Trading Liquidity
• Historical Depth
• Open Interest (for tokens listed on major trading platforms)

Community and Belief

The success of memecoins is often closely related to the strength of their community. Investors should pay attention to:

• Resonant narratives and community slogans
• The strength of community members' beliefs and sense of belonging
• Community leadership and coordination skills
• Cultural Integration Level
• Social media promotion strategies (such as emerging platforms like TikTok)

Value Assessment

Evaluating the "fair value" of a memecoin can be done through the following methods:

1. MVRV (Market Value to Realized Value Ratio): When MVRV is below 1, it may indicate a local bottom.

2. Momentum Indicator:

   • RSI (Relative Strength Index): An RSI close to 30 indicates oversold conditions, while close to 70 indicates overbought conditions.
   • Moving Average: Analyze the position of the price relative to key moving averages.

3. Google Search Trends: Reflects changes in public interest.

Macroeconomic Environment

Memecoins are extremely sensitive to liquidity conditions and risk appetite. Favorable macroeconomic conditions and the return of "animal spirits" are often key factors in the strong performance of memecoins.

Conclusion

Investing in memecoins requires a comprehensive consideration of various factors, including their relationship with L1 assets, on-chain data, community vitality, value assessment indicators, and the macro environment. Nevertheless, memecoins still belong to high-risk assets, and investors should approach them with caution and manage their positions wisely.