By now you already know the narrative: memecoin supercycle.
How did we get here? Let's walk back a bit. Why do people invest so much in companies that don't pay any dividends? You might say "share buybacks", but that is basically saying "someone else will buy it". What seems so solid - real companies and profits - in some cases become more about memes and narratives than people want to admit.
Today you can find stocks that probably trade well above any nuts and bolts value. In memecoin terms, TSLA is almost like an "Elon Coin", and that's why it trades so high. As long as people want to buy, it can remain this way.
To make clear the silliness, imagine you own a bunch of real estate that has some valuation, but when packaged together, the package somehow trades at many multiples of that value. It's hard for normies to wrap their head around, but this "meme premium" is from speculators creating their own zero sum game around that asset, hoping to sell it to another speculator.
What is happening? Gambling revenues are booming, as people are either getting increasingly desperate or rich. Whether the move is TSLA calls or shitcoin perps, these are essentially additional outlets for gambling. In this case, many on CT are gambling addicts, hoping to catch a 100x by buying into (insert cashgrab solana shitter here).
Ponzis have been part of crypto (for better or worse) for a decade, including the ICO era, NFTs, play to earn, and so on. Almost all projects were cash grabs that started with a flimsy premise, created a ponzi/token around it, and sold out like hotcakes. Left curve buyers bought into the premise and right curve buyers bought in because they were first, and the price went up.
The arrival of these memecoins, especially the ones with no utility, are the purest expression of the ponzi, as the ponzi is right in your face, the only thing it promises. It's also more efficient than dealing with NFTs or other complicated systems.
Another aspect is that liquidity can hide the ball. Shitcoins (and nfts) use low liquidity to meme that your bag is more valuable than it is. If for example a tiny bit of some shitcoin trades at some high price, that doesn't mean the sum of everyone's bag is worth that much, yet most are inclined to believe it. This is a kind of arbitrage on perception vs reality that these assets exploit basically.
Anyways, back to today. In everybody's dream outcome, BTC marches to infinity ($100k+), we magically get a lot more retail investors who want to buy your meme coins, and your girlfriend has a girlfriend. And if ETF flows continue (or accelerate), then yeah, that's where we are going. So I recommend staying on the train.
But I think there is a middle ground option, and I'm getting prepared for that possibility, where ETF flows taper off. Every indicator is flashing now. OG retail is definitely here, and they are spraying. Influenzas are all shilling cashgrab shitters daily. Funding is 100%apy to long, sometimes much higher on alts. Fast money from BTC appreciation went everywhere, but some places are more leaky than others and people will have to take an L at some point. Also, ETH is still an expensive chain to use for most applications.
A ponzi system needs more and more oxygen to breathe, and unless it gets that oxygen from somewhere, it can quickly deflate.
To buy memecoins now, you have to think who the last buyers will be. In regards to small cap memes, most of retail will get sucked in by manipulated charts/PA and astroturfed discussions, and their money will get funneled into professional shitcoin producers. Today, Twitter is a battlefield of which KOL can shill which cashgrab shitter memecoin, those posts get boosted by these pirates and you will get slaughtered on chain. Yes, someone extremely determined can win. But if you choose to play on chain as a low info normie, just know that there will be few winners and many losers.
To leverage long now, you have to pay obscene funding and fees. It's a completely different bet than spot for this reason. There is a difference between what is likely to happen and what is a bad bet, eg. celtics probably win, but laying 10-1 is a bad bet. And with this much juice, this is where it starts to get into bad bet territory.
Also, a lot of gamblers are getting pushed towards more and more leverage which amplifies the possibility of a death wick - that April 2021 kind of wick where I lost $100m in a day. There, bitcoin went from 68k to 40k. Study the run up in 2020-2021, when bigger wicks were increasing in occurrence. Study 2019. Hell, study every year in the book.
Today, I think you should stay on the train. Be 100% in spot crypto, mostly majors, and play somewhat defensively, knowing we are in later innings. Don't lose your shirt. These indicators (extremely high funding, extremely bullish sentiment, mania, etc.) can get more extreme, but they always reset in the end. For every gigalong getting liquidated, there is another guy buying that liquidation. Be that guy. This is now a game of survival. Most will not survive. All you have to do to win, is survive.
For me, my home run is to grab a giant red wick or two on the path to infinity, and make money both ways. But whichever way the ball goes, I will be a winner. I have never forgotten the value of a dollar, and I never will. Champions adjust. I'll see you at the citadel.
Ape City.