In recent years, memecoins and NFTs have become prominent assets in the crypto world.
Memecoins, a type of cryptocurrency inspired by internet memes, have gained quite some popularity and gathered millions of followers. The community's support and social media buzz have led to a significant increase in its price. NFTs, on the other hand, are digital assets on the blockchain representing ownership of unique items like art, music, or collectibles. Unlike memecoins, NFTs usually have some utilities in their ecosystems.
Bull markets are known for their price appreciation and play a crucial role in asset growth. During bull runs, investors are more willing to take risks on novel assets, leading to surges in the popularity and value of both memecoins and NFTs. This environment fuels innovation and brings a wider audience to these digital assets, highlighting their potential and pitfalls.
In this blog, we'll explore the dynamics of memecoins and NFTs in the previous bull market compared to the current one.
Memecoins in the Previous Bull Market#
The previous bull market that was around in 2020-2021 was known for the institutional adoption of Web3. Bitcoin broke through previous highs and reached $64,000. This rise signaled a shift in users’ perceptions, drove speculation, and led to many institutions and organizations adopting crypto.
During this phase, memecoins like Dogecoin and Shiba Inu became the prominent players of the cryptocurrency scene. Prices of these memecoins soared to extraordinary heights, fueled by social media frenzies and a fear of missing out (FOMO) among retail investors.
Originally created as a joke in 2013, Dogecoin gained serious traction in 2021. In fact, we witnessed a serious growth of 3300% on Doge, lifting it up to the 10th cryptocurrency in terms of market cap. In May 2021, it reached an all-time high of $0.731. This was largely due to the endorsements from celebrities like Elon Musk and Mark Cuban.
Shiba Inu, often referred to as the “Dogecoin Killer,” followed Dogecoin's popularity and the growing meme culture. Platforms like Reddit, Twitter, and TikTok played pivotal roles in spreading memes, generating viral interest and increasing prices.
Many investors viewed these coins as lottery tickets, hoping to capitalize on short-term gains rather than long-term investments. The influence of media coverage was substantial, amplifying price movements through sensational headlines and viral tweets.
Memecoins in the Current Bull Market#
Today's bull market, which kicked off around April 2024, has seen the rise in popularity of new memecoins like PEPE, which have joined the previous list of cryptocurrencies inspired by memes. PEPE, based on the "Pepe the Frog'' meme, has quickly gained attention for its playful concept and active community.
Market dynamics have shifted, with investors becoming more careful. Instead of jumping on any memecoin, they now look at the coin's potential use, the strength of its community, and its financial model. This makes the memecoin market more stable compared to previous times.
Investor sentiment also seems to have changed. People are not just interested in quick profits but are also looking at the long-term prospects and community activities of these coins. Memecoin communities have grown stronger and are more involved in promoting their coins, sometimes even creating real-world projects and events.
Despite their vigilance and carefulness, users have been victims of multiple memecoin exploits. Take the hack on NORMIE and rugpull operated by CONDOM, for example.
NFTs in the Previous Bull Market#
In the last bull market, NFTs (non-fungible tokens) surged in popularity, becoming a major trend in the crypto world. While NFTs went public in 2017 after the endorsements and adoption of EIP-721 standard, it was a year of experimentation and development. The launch of Cryptopunks and CryptoKitties was prominent during the period that helped the NFT ecosystem get its shape.
The exponential boom of NFTs occurred during the 2020-2021 bull run. Key trends during this phase included the rise of digital art and collectibles. Platforms like CryptoPunks and Bored Ape Yacht Club became extremely popular, offering digital avatars that users could own and trade. These NFTs often served as status symbols in the digital community and as collectibles.
Market growth was explosive, backed by the novelty of owning digital assets and the ease of trading on blockchain platforms. Media coverage and celebrity endorsements fueled public interest, bringing NFTs into the mainstream and encouraging more people to explore this new form of digital ownership.
High-profile sales made headlines, with some NFTs selling for millions of dollars. Beeple’s digital artwork “Everydays: The First 5000 Days” sold for a record-breaking $69.3 million in March 2021. In 2021 alone, approximately $41 billion worth of cryptocurrency was spent on NFT marketplaces, showcasing their rapid ascent and immense market interest.
When it comes to exploits, Stazie lost around $1 million to a phishing scam in August 2021. Iconics, Evolved Apes, Bored Bunny, and Frosties were some of the scam projects that were rugged, post bull market.
NFTs in the Current Bull Market#
After the last bull run, the NFT market saw a steep decline, leading to the NFT crash of 2022. Many NFTs, including the popular ones, were bearish and reached floor prices.
While some interests resurfaced around 2023, the NFT market could potentially recover to some extent in the 2024 bull run. However, it’s rather unlikely that we would see the same hype and chart explosion as in 2021.
One of the major developments coming to the current bull market is the evolution of NFTs with new trends and their expansion into areas such as gaming, metaverse, and sportsfi. This has allowed players to own and trade unique items within the virtual worlds and games. Similarly, traditional brands entering the NFT space have potentially given it a boost. For example, Starbucks launched its first paid NFT collection in March 2023, selling 2,000 digital stamps at $100 each in just 20 minutes.
Pudgy Penguins is a prominent example of an NFT project making waves currently. While it was launched in August 2021, it has gained the most traction around the first couple of months of 2024. These PFT themed artworks have soared due to its appealing artwork and strong community.
Anyway, investor attitudes are maturing, with a greater emphasis on the practical benefits of NFTs rather than speculative trading. Besides, there are now many smaller NFT projects with more affordable prices and practical uses, instead of a few high-value collections like in 2021.
The sector still faces challenges such as rug pulls, phishing attacks, smart contract vulnerabilities, DeFi wallet issues, etc., which can affect user confidence. For instance, in September 2023, a phishing attack targeting OpenSea brought to light security concerns that require attention.
Similarly, MetaDragon is one of the most recent hacks caused by a smart contract vulnerability.
Comparative Analysis#
Comparing the last and current bull markets, memecoins and NFTs show some similarities and differences.
In both periods, memecoins like Dogecoin and PEPE relied heavily on social media hype and community support to drive interest and prices. However, current investors are more cautious and evaluate long-term value and community engagement rather than just riding the hype.
The trends in NFTs have also evolved. The high-priced sales and widespread excitement for NFTs as collectibles have calmed down. Today, NFTs are more focused on utility in gaming, the metaverse, and integration with traditional brands, leading to a more balanced growth pattern with smaller, practical projects.
In terms of security, both markets experienced hacks and scams, leading to the loss of millions of dollars. In both bull runs, scams, phishing, and smart contract vulnerabilities were exploited to affect digital assets. Addressing these challenges remains crucial for sustaining investor confidence in both assets.
Legit memecoin and NFT projects are continuously strengthening their defenses with smart contract audits and vulnerability fixes. As a user, you need to remain vigilant and inspect the projects for potential vulnerabilities. Examining the projects’ communities and user sentiments could be helpful.
Additionally, the use of multisignature wallets (which require multiple approvals for transactions), advanced consensus mechanisms, and hardware security modules are crucial to building a more secure infrastructure.
For digital asset owners, another effective approach to protecting their assets is to consider DeFi insurance. It offers financial protection against losses due to hacks, exploits, or other unforeseen security breaches.
About Neptune Mutual#
Neptune Mutual is a prominent DeFi insurance solution on the market, offering quick and seamless payouts. We have developed a marketplace where crypto users can purchase cover policies and protect their assets against all kinds of DeFi security threats.
If you are the developer of a memecoin, NFT, or any Web3 project, protecting your community is a must. One of the ways to do so is by creating a cover pool in our marketplace, available on the Ethereum, Arbitrum, and BNB Smart Chain networks. Users can purchase covers from the available liquidity in those cover pools.
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