Meme Coin: The Financial Frenzy and Speculative Instincts of the Digital Age

Meme coins are undoubtedly the most eye-catching and perplexing phenomenon in the cryptocurrency field. From SHIB, which was spawned from a Japanese Shiba Inu meme, to Dogecoin, which was popularized by the CEO of a tech company, these tokens, originating from jokes and thriving in communities, continually challenge the values of the traditional financial world with their dramatic price fluctuations and immense wealth effects.

Are they truly worthless digital bubbles, or do they represent a whole new asset class? When placed in front of the mirror of traditional finance, we can conduct a deep role deconstruction. Meme coins are not a single role, but a mixture and amplification of multiple marginalized or suppressed roles in the traditional financial world. They are the ultimate release of speculative desire, a financial totem of community culture, and may also serve as a “demon-revealing mirror” to examine the essence of modern finance.

1. Market Level: “High-Risk Lottery” and “Penny Stocks or Junk Bonds”

From a traditional financial perspective, Meme coins are far removed from the “value investment” tools that ordinary investors encounter in traditional finance (such as blue-chip stocks and government bonds); their most accurate counterparts are lottery tickets and casino chips.

High-Risk Lottery or “Casino Chips”: The essence of traditional lotteries is that buyers pay a definite small loss to gamble on a chance that is extremely low but potentially yields a high return. Meme coins completely follow this logic. Most buyers do not base their decisions on an analysis of the underlying technology, application scenarios, or discounted cash flow, as these do not exist in the vast majority of Meme coins. Their investment decisions stem from a simple belief: that there will be the next “more foolish” person who will take over at a higher price. This is a perfect interpretation of the famous “Greater Fool Theory” in the digital age.

Unlike traditional lotteries, the “drawing” of Meme coins is not a fixed point in time, but a continuous process. This process may be triggered by trending topics on social media, endorsements from influential figures, or sudden community festivities. Its price chart no longer reflects the fundamentals of the business but rather serves as a real-time electrocardiogram of collective sentiment. Stories of instant surges of 500% alternate with moments of “ankle chopping,” making up the daily routine of this large-scale online gambling.

Highly Speculative “Penny Stocks” and “Junk Bonds”: Some may compare them to “penny stocks” or “junk bonds” in traditional financial markets. Indeed, they share the characteristics of “high risk, high potential return.” However, the risk dimensions of Meme coins are more complex and extreme. “Penny stocks” at least have a legal entity behind them, with assets, business (no matter how weak), and are subject to securities regulators. While price manipulation does exist, it still operates within a certain legal framework. “Junk bonds” have high default risks, but their pricing is still based on the issuer's credit rating, asset collateral, and expected future cash flows, with a relatively mature analytical system.

Meme coins are mostly created on decentralized networks, without actual controllers, and have no business revenue. Their smart contracts may hide vulnerabilities, and the founding team can remain anonymous. Even more frightening is the “rug pull” scam, where developers suddenly withdraw funds from the liquidity pool, causing the token's value to drop to zero instantly. This accumulation of systemic risks makes the risk level of Meme coins far exceed that of any similar object in traditional finance, pushing speculation to unprecedented heights.

2. Cultural Aspect: “Cult Stocks” and “Social Currency”

If Meme coins are merely a gamble, they might not possess such resilience. Their deeper magic lies in their successful transformation from financial instruments into cultural symbols and social tickets. In this regard, the best analogy is the GME stock in the 2021 “GameStop incident,” which amplified its cultural attributes.

The Communityization of Financial Behavior and Identity: The core of the GameStop incident was that retail investors on a certain forum collectively bought GME stocks that were heavily shorted by institutions, successfully “taking aim” at Wall Street hedge funds. In this process, GME stocks became more than just simple equity investment certificates; they turned into a “banner”, a kind of “faith”, and a “weapon” for grassroots retail investors against the financial elite system. Holding GME became a declaration of identity: “I am a member of the WSB community, and I stand on the opposite side of Wall Street.”

Meme coin has pushed this community financial behavior to a new peak. Holding Dogecoin means you agree with its joking slogan “the people's currency,” understand its origin as a parody coin mocking Bitcoin from 2013, and join a global, humor-filled community movement. Shiba Inu coin has built a massive “SHIB Army,” strengthening holders' sense of belonging and mission through complex ecosystem narratives and a burning deflationary mechanism. Here, investing is no longer cold data analysis, but a warm identity recognition and community co-creation.

Accumulation and Realization of “Social Capital”: In the era of social media, attention is the scarcest resource. The essence of Meme coins is the financialization of collective attention. A successful Meme coin is a cultural gene that can self-replicate and spread virally. Early discovery and dissemination of a certain Meme coin can not only bring financial returns but also accumulate considerable “social capital” within the community — you are viewed as a discerning “prophet” or an interesting “meme king.”

attention attracts capital inflow

3. Behavioral Level: “Emotional Value” and “Speculative Bubble”

Throughout financial history, Meme coins are not an unprecedented monster; they are merely the latest incarnation of the recurring speculative bubbles in human history, now in the digital age. By comparing them to the Dutch Tulip Mania, the South Sea Bubble, and the Internet Bubble, we can clearly see the astonishing similarities in history.

Narrative-Driven Value: At the core of all speculative bubbles is the “narrative” replacing “fundamentals” as the core of pricing. In 17th century Holland, the value of tulips detached from their ornamental qualities as flowers, driven by narratives of “rarity, uniqueness, and status symbol”; a bulb of “Semper Augustus” could be exchanged for a mansion. In the early 21st century's internet bubble, a company's value was no longer dependent on its profitability and cash flow, but based on the grand narrative of “clicks”, “user growth”, and “new economic models”.

Today's Meme coin derives its value entirely from the narratives of “community power”, “cultural symbols”, and “rebellious spirit”. A social media post by the CEO of a tech company has an influence far beyond any financial report. This reveals a timeless aspect of human nature in the financial markets: people will always be drawn to a compelling story and the dream of quick riches.

Fear of Missing Out: In every bubble, “fear of missing out” is the core fuel driving irrational price increases. When witnessing people around you becoming overnight millionaires by buying a certain Meme coin, rational thinking often gives way to a strong sense of anxiety. This emotion is infinitely amplified in the cryptocurrency market, where trading occurs 24/7 and information spreads at the speed of light.

At the same time, every era finds a rational explanation for its own bubble, claiming “this time is different.” During the tulip mania, people believed that the demand for beauty was limitless; during the internet bubble, they believed that traditional valuation models had completely failed; and during the Meme coin craze, followers shouted “community is value” and “decentralization changes everything.” However, history has repeatedly proven that when the music stops, the narrative goes bankrupt, and the law of gravity ultimately takes effect, prices will return to their intrinsic value— for the vast majority of Meme coins, this value is infinitely close to zero.

IV. Beyond the Boundaries of Traditional Finance

Although we found many analogies, Meme coins are not a simple copy of traditional roles. They deconstruct and transcend traditional financial models through blockchain technology, showcasing their unique characteristics.

Low Barriers to Issuance and No Entry Requirements: In the traditional world, issuing stocks or bonds requires a cumbersome legal process, underwriting by investment banks, and approval from regulatory agencies, which creates a very high barrier. However, in the world of cryptocurrency, anyone can create and issue their own Meme coin within minutes with minimal cost and some technical knowledge. The extremely low barriers to issuance have caused the market to explode in an almost “wild growth” manner, while also leading to a mix of quality projects and rampant fraud.

Globalization and Instantaneity of Liquidity: A “penny stock” traded on the US OTC market may have very poor liquidity, making it difficult for ordinary investors to buy and sell. In contrast, a top-tier Meme coin, once listed on global decentralized or centralized exchanges, can achieve 24/7 global instant trading. This deep, uninterrupted liquidity provides a breeding ground for extremely high-intensity speculative behavior, which is unmatched by any traditional speculative instruments.

The Vacuum of Regulation and the Ambiguity of Morality: Traditional financial activities are within a strict regulatory moat designed to protect investors and maintain market stability. In contrast, the world of cryptocurrency, especially in the Meme coin sector, largely remains a “lawless land.” The absence of regulation, on one hand, grants significant freedom and innovation space, while on the other hand, it leaves market manipulation, insider trading, fraud, and other behaviors almost unpunished, pushing the principle of “buyer beware” to its extreme.

Meme coin may force us to rethink some fundamental questions in extreme ways: What is value? Besides resource allocation, what human emotions and social needs does the financial market carry? It is like a “mirror of truth” that reveals the speculation, frenzy, and tribalism that have always existed within the financial system but are too ashamed to be acknowledged beneath the rational exterior. It transforms high-frequency speculation in Wall Street trading rooms into a national game that every mobile user can participate in; it turns the social networks of elite clubs into global, interest-based digital communities.

Therefore, the fairest evaluation of Meme coin may not simply be dismissing it as a “scam” or praising it as a “revolution”. It is more like a complex polyhedron:

For gamblers seeking quick wealth, it is a digital casino.

For young people seeking a sense of belonging, it is a cultural community.

For financial scholars, it is an excellent behavioral finance experiment field.

For regulators, it is a dangerous area that needs to be regulated urgently.

For the entire society, it is a modern fable about technology, humanity, and greed.

Meme coins may, like most speculative bubbles in history, experience a long silence after the frenzy, with the vast majority of projects ultimately going to zero. However, what they reveal—about the power of communities, the role of cultural narratives in value creation, and the profound impact of technology on financial inclusion—may permanently change our understanding of “finance.” In the future where traditional finance and crypto finance continue to collide and merge, this seemingly absurd carnival of Meme coins may very well be that jarring yet undeniable unique melody.