Meme Tokens - Crypto Academy / S4W7 - Homework Post for @wahyunahrul
Hello to everyone out there, I would love to join Prof. @wahyunahrul to welcome each and everyone to the seventh week of this season. The topic for this week is Meme Tokens and I'll try my best to give detailed answers to the test questions listed. If you reach the requirements, you could join me to do same my reading up the lesson on this link.
1.)
Definition of Meme Tokens
A meme token is a cryptocurrency that is influenced or is based on a joke. This type of currencies began with the introduction of the Doge Coin in 2013 by two software engineers, Billy Markus and Jackson Palmer. The coin was invented in mockery of the incredible speculations of the Bitcoin and cryptocurrencies as a whole.
It's really funny, because it had low market cap, an outrageous supply and at the time, it had no value. But, liquidity pools are used to increase the value of these tokens. Value is added as traders purchase these coins out of the liquidity pool and reduced as traders dump the coins back to the liquidity pool. Although, there are some strategies used to lure investors to keep their coins, This was done by giving some percentage of the transaction fees to the holder. Also, higher fees are given to traders selling and lower fees are given to traders buying.
Back in 2013, there wasn't a significant use for these coins. Like I said, they were just created for fun and jest, not actually to solve problems, until today with the invention of coins like Shiba Inu which is a means of exchange on the shibaswap.
So, why would Meme Tokens have an impact on the crypto currency markets?
Firstly, we have to understand what it means for a cryptocurrency to make an impact on the markets. Impact here simply means the influence or effect of the meme token in the cryptocurrency markets today.
Today, there are hundreds of this type of coins out there and their influence increases as there is a spike in demand for them. All the investors want to do is to make more cash and since there's been loads of news and speculations on different platforms, even the YouTube channels broadcasting about how much increase in value these meme tokens have experienced in the past months, more investors have been lured into the meme crypto markets. This has made most of these meme coins explosive in nature, multiplying in value by thousands of percent.
For instance,
Billionaire, Elon Musk made a twitter post on October 4th about his puppy Floki. People really got excited about this picture and since the image looked a lot like the Shiba Inu token icon, they felt Elon Musk was doing a promotion for Shiba Inu and a lot of traders were lured into purchasing the coin.
Everyone just sits back, make analysis and await the next news or promotion from these whales on social media. From the charts, you can see how much growth this meme coin experienced. It is so large and this is to show you how much investors have acquired interest in meme tokens. People love it because of the incredible profits in a short space of time.
Also, in 2021, some of the meme coins have skyrocketed in their market cap and have been ranked among the top 20 coins in the world. I believe more meme coins will experience such increments. It just depends on one twitter promotion post from a whale. Such influence on investors has declared how much impact these meme coins will have in the cryptocurrency markets.
2.)
Yes to me, I think there is need for the creation of meme tokens. Everybody likes a good laugh xD. Well, this question is relative. It all depends on a traders believes and trading methods. A bulk of people prefer to make fundamental analysis on coins that have high utility, high market caps or even low supply. They believe to buy and hodl coins that stand a chance to sustain themselves in future with a continuous growth. Eg, coins like Ethereum or even BTC itself. It's a very lucrative strategy of trading cryptocurrencies. But it is still risky because of the volatile nature and unpredictability of these coins.
It's quite the same with the meme coins, I must say, I take the meme coins as a terrible investment but incredible gamble because you may stand a chance of losing 30 to 50% of whatever you stake but then you also stand of chance of multiplying your stake in thousands of percent. Some traders may stack up millions of these coins and with this strategy earn millions of dollars (just like what we saw on the SHIBUSDT chart above). So, there is need for the creation of these meme coins.
In 2013 when doge coin was invented, you actually needed to be a programmer to create any cryptocurrency but recently, things have been made easier. Anyone can create a cryptocurrency by just registering it on a blockchain and simply provide a name. This has increased the possibilities of new meme coins that are baseless and of no use to be produced. It's not a good thing because people with little knowledge of cryptocurrencies may end up purchasing these meme coins because of how low the price is and if there isn't good promotions for it, the holders of the token end up losing their equity to stagnant or useless coins.
There are still some useful and good enough meme coins out there like Elongate.
This coin offers its transactions fees to charity organisations. It has made a total of $3,490,000 for just charity. This is very advantageous to the society and holders of this coins have the right to say they are part of such good. There is also an exchange to swap this elongate token on swap.elongate.cc.
Lastly, I would say that there is need for the creation of the meme tokens because cryptocurrencies were invented back in 2007 as a means of exchange without intermediaries and from what we,ve seen lately from the Elongate, Shiba Inu and even the Doge coin, they are still serving the same purpose.
Another example for this is a transaction that took place during the pandemic
The co-founder of Ethereum, Vitalik Buterin in his generousity made a transfer of 1.2 billion dollar worth of Shiba Inu meme coins to aid India surpass their COVID19 crisis.
This is enough proof of why this meme tokens need to be created.
3.)
To me, I would prefer just make trades over short periods with the meme coins. Cryptocurrencies as a whole are volatile and it isn't advisable to use them as a long term investment tool. That's why stable coins were introduced to serve such purposes.
That aside, these meme coins are extremely risky assets to invest in because most of them don't necessarily have utility and they gain value with hype. Hype here simply means that these type of cryptocurrencies increase in value just because of some news, tweets or promotions from whales. People rush into the markets to buy them and once the hype dies down and the traders have made their profits off them, they sell off the coins and the price drastically falls down.
These traders are not to be blamed because no one wants to make a loss. Although, not all of the meme coins may experience this increments and this has made this coins just a trading tool and less of a long term investment tool. So, traders are meant to watch out for news, review the charts, keep their stop losses and avoid excessive greed.
A typical example,
A coin was made after a tweet by Elon Musk, The Woke James Bond. The tweet was made on May 1st.
The WJB meme coin experienced an uptrend from the 1st of May to the evening of the 2nd of May and then it experienced a massive dump in its price. This illustration demonstrates that these meme coins are clearly supported by hypes from whales tweets or promotion and after the hype, its value falls. If you cashed out on the trade by the evening of the 2nd, you would have made a whole lot of profit and if you saw the coin as an investment opportunity, you would make a loss. Meaning, these coins are mainly good for short term trading purposes.
4.)
If in question number 3 you choose to trade, then do trade using a small capital or using a demo account. Show how you trade based on the information you get and explain the supporting indicators you will use. (Screenshot Required)
I chose to trade in question 3, because of that, I would be trading with the ELON/USDT pairs.
Why I chose these pairs?: Since Monday, I've been searching for the right pairs to make some trades with. Been looking up whales twitter handle like, Elon Musk for a hype about a meme coin or even a coin with a name referencing a tweet he makes so that I can acquire a trading opportunity. Unluckily of me I didn't find because these opportunities aren't that easy to get.
Well, that was until I saw some information on this site, emphasizing that "Dogelon Mars coin is the second doge-themed coin to soar in its
value". I rushed and checked up its stats on coinmarketcap
Luckily for me, the Dogelon Mars coin was experiencing a lot of spikes in its price, it had increased by a 107% in the past 7 days and this raises a lot of trading opportunities. This is because, since demand for the coin has increased, there are a lot of traders purchases and also, traders will be cashing out this coin. Meaning the market will be so busy.
The Type of Indicators I used: In this trade I used the Stochastic and the EMA. Since the Stochastic is a leading indicator, I used it to know when the price of the coin was in the overbought region. Then I used the EMA which is a lagging indicator to confirm when the price enters a downtrend.
For the trade, I would be using Paper View on Tradingview.
As you can see, the stochastic indicates that the price was at the overbought region and this means that the price is about to enter a downtrend.
The current market price of the coin was at 0.00000051USDT. So, I made a limit-Sell-order, informing the exchange to sell the coin at 0.00000052. I set my take profit at 0.00000046USDT and my stop-loss at 0.00000055USDT. After affirming my decision, I clicked on Sell.
I waited till night and luckily for me the price entered a downtrend and hit my take profit of 0.00000046 USDT. I bought the same amount of coins back for less and made a profit of 569 USDT after the trade.
The meme coins are very popular today. Upon being a coin meant for jokes, coins like the doge coin has shown the world its ability to multiply tremendously and increase in thousands of percentages. A lot of people have made a lot of money from this form of technology, some even millionaires today.
Meme coins like the Elongate coin have created a format to produce a lot of cash for Charity. This has helped a lot of charity organisations and has even aided its investors or traders to be part of such philanthropic works.
I believe the meme coins stand a great chance to move the crypto markets in the future. It's just two for now in the top 20 but more are to come.
Special thanks to Prof. @wahyunahrul for such great lesson
#club5050
I changed my rewards of 32SBD to 387steem on the 21st of October and powered up half of it which is 194 steem.
#club5050 😀
#club5050 😀
Let's goo!!
Very excellent work, I knew you would pull through. My oga I go need learn from you
Thanks for the compliments my brother