2 Ways People Are Making Millions Off ‘Meme Coins’ and Why It’s a Dangerous Investment

Meme coins — cryptocurrencies inspired by internet trends or memes — have surged in popularity. Some well-known meme coins include Dogecoin, Shiba Inu, Pepe, Trump, Bonk and Floki. While some investors have made millions from meme coins, their volatile nature makes them a risky investment for building long-term wealth.

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Here’s a look at how people are profiting from meme coins, why they are a dangerous investment and alternative options to consider.

Buying Early

Some investors get lucky by purchasing a relatively unknown meme coin before it surges in popularity. Of course, hindsight is 20/20, and it’s easy to identify successful meme coins after the fact. However, predicting the next big meme coin remains nearly impossible.

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For example, an unnamed warehouse worker invested $8,000 in the Shiba Inu coin before it skyrocketed more than 700,000%. He later sold most of his holdings and retired with more than $1 million. Such dramatic gains are rare, but in this case, the gamble paid off.

Promoting a Meme Coin

Individuals with large social media followings can profit from promoting meme coins. Glauber Contessoto, for instance, invested more than $250,000 in Dogecoin and saw his holdings surpass $1 million. Since then, he has been paid in Dogecoin to promote the cryptocurrency on social media.

Another example is the Trump coin, which generated nearly $100 million in trading fees, benefitting its namesake, Donald Trump. With Trump’s backing, the coin’s market value soared to $14.5 billion before plummeting shortly after his inauguration. While the coin’s creators profited from trading fees, many investors who bought and held onto it likely faced losses.

Why Meme Coins Are a Risky Investment

Although some investors have profited, meme coins come with significant risks, including:

• Market Manipulation: A lack of regulation and transparency makes meme coins susceptible to manipulation. Pump-and-dump schemes — where creators artificially inflate a coin’s value before cashing out — are common in the crypto space.
• Limited Transparency: Many meme coins provide little to no information about their goals, leadership or underlying technology. Investors often buy in without a clear understanding of what they are supporting.
• Extreme Volatility: Meme coins are highly volatile. Prices can soar when hype is high but crash just as quickly when sentiment shifts. Predicting these fluctuations is extremely difficult.
• Lack of Utility: Unlike established cryptocurrencies such as Bitcoin, most meme coins have limited or no real-world use cases.

Determining If Meme Coins Are for You

Only you can decide whether to invest in meme coins. While allocating a large portion of your portfolio to them is generally unwise, investing a small amount for speculative purposes may make sense for some. However, meme coin investments should be approached with caution.

Alternative Investments to Meme Coins

If you’re looking to build wealth without the high risk of meme coins, consider these alternatives:

• Real Estate: Investing in physical property or real estate investment trusts (REITs) can provide stable returns.
• Stocks: Unlike meme coins, stocks represent ownership in companies and have a proven track record of long-term growth.
• Cryptocurrency: Investing in established cryptocurrencies like Bitcoin or Ethereum still carries risk but offers more utility and stability than meme coins.

Overall, meme coins can be tempting, but they come with substantial risks and uncertain rewards. While some investors have struck it rich, most face losses. If you choose to invest in meme coins, proceed with caution and avoid putting in more than you can afford to lose.

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