Analysis of Memecoins Investment Strategies

Memecoins, as a special category in the cryptocurrency market, have unique investment values and risk characteristics. This article will analyze the investment logic and strategic key points of memecoins from multiple perspectives.

Beta Effect

Some memecoins have a high beta coefficient against Layer 1 assets, which means they can provide leveraged exposure to L1 assets without using leverage. Taking BONK as an example, when its 30-day beta exceeds the 90-day rolling beta, a significant short-term increase often occurs.

The price trend of BONK is highly correlated with SOL, but during periods when BONK performs exceptionally well, this correlation may weaken. Overall, BONK can be viewed as a high-risk, high-reward bet on SOL.

On-chain Data Analysis

By analyzing on-chain data, we can assess the quality and belief of the memecoin holder base:

• The growth rate of Token holders reflects recent popularity.
• The median and average holdings reflect the belief of holders.
• The proportion of large holders ( > $1000 and > $100k ) reflects the investor structure.
• The retention rate of giant whales and the net inflow/outflow of DEX reflect the behavior of large holders.

In addition to on-chain data, sufficient trading liquidity and multiple significant pullbacks are also important considerations. For tokens listed on mainstream exchanges, the open interest is also worth paying attention to.

Community and Belief

High-quality memecoin projects often have the following characteristics:

• Engaging narratives and slogans
• Strong sense of community belonging
• Effective community coordination
• Cultural Embeddedness
• Excellent marketing capability

Valuation and Entry Timing

The MVRV( market value/realized value) ratio is an important indicator for assessing the valuation of memecoins. When the MVRV is below 1, it often indicates that it is close to a local bottom.

Momentum indicators like RSI and moving averages also help in determining the buying timing. An RSI close to 30 indicates oversold conditions, while a close to 70 indicates overbought conditions. Buying can also be considered when the price breaks through key support levels.

In addition, social sentiment indicators such as Google Trends can also be used as a reference.

Macroeconomic Environment

Memecoins are highly sensitive to the liquidity environment. Favorable liquidity conditions and risk appetite sentiment are key prerequisites for allocating memecoins.

Conclusion

Investing in memecoins requires a comprehensive consideration of multiple factors such as beta effect, on-chain data, community atmosphere, valuation level, technical indicators, and macro environment. Although there are high risks involved, it is still possible to achieve considerable returns in this field through a systematic analysis framework.