The rise of memecoins has sparked a new wave of excitement in the world of cryptocurrency, attracting inexperienced traders who are on the lookout for the next big token that could bring them significant profits.
According to market intelligence platform IntoTheBlock, the number of wallet addresses holding meme-related tokens for less than 30 days reached a record high in March, indicating a surge in new traders buying memecoins during that time.
This increase in traders entering the memecoin sector can be attributed to the remarkable gains that memecoins have showcased in the first quarter of 2024. Coin information tracker CoinGecko even referred to the memecoin sector as the “most profitable crypto narrative” of the year’s first quarter. Memecoins, on average, displayed a staggering 1,312.6% return, making them the highest-earning tokens in terms of market capitalization. Notably, projects like Book of Meme (BOME) and Dogwifhat (WIF) contributed to these impressive percentages during the memecoin frenzy.
The allure of life-changing gains has also played a significant role in attracting traders to the memecoin sector. For example, one trader turned a mere $62 into $2 million in December by investing in a Solana memecoin. This trader stumbled upon a memecoin called Silly Dragon (SILLY), which made fun of Solana co-founder Anatoly Yakovenko’s Halloween costume. Similarly, another trader turned $13,000 into $2 million within just one hour by purchasing a meme-based token.
On April 3, yet another trader experienced a staggering 15,700% gain after investing in a memecoin called Donotfomoew (MOEW), which was minted on the Base network.
While memecoins have the potential to generate massive profits, not everyone is fortunate enough to benefit from them. Some individuals miss out on profits by selling their tokens too early, while others fall victim to scammers who take advantage of the hype surrounding memecoin presales to steal their funds.
For instance, on March 15, a trader missed out on potentially millions of dollars after selling their BOME tokens before their prices skyrocketed. The trader had bought 170 million BOME for $8,000 and sold them for approximately $131,000. At the time of writing, BOME is trading at around $0.01615, meaning those tokens could have been worth $2.7 million in the current market.
In another unfortunate incident, a Solana memecoin project called “Condom” abandoned its investors before its launch, resulting in nearly $1 million worth of Solana (SOL) tokens being taken by the memecoin creators.
When it comes to investing in Solana memecoins, there are five dangers that traders should be aware of to protect themselves from potential risks and scams.