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3 Things You Should Know Before Investing in Memes

 The concept of meme coins has become one of the most talked about investment opportunities in the crypto space, with the Shiba Inu price increasing by 50,000,000% in the past months.

While it is difficult to ignore the huge potential of animal-centric and seemingly innocent meme, it is important to note that investing in meme coins is an incredibly risky venture and can often result in huge losses through fraud, hacking and exploitation.

How did meme coins get started?

3 Things You Should Know Before Investing in Memes

Before we get into detailing the main features to look for in a credible meme, let's first define the concept of the meme itself. Meme coins were introduced in 2013 and are usually crypto projects built around meme and animal themes. For example, DOGE, the first ever meme coin, was inspired by the Shiba Inu, a breed of Japanese hound. Dogecoin took over the internet in the early 2010s.

Notably, the success of the Dogecoin has spawned a horde of other dog-themed coins, including the Dogecoin killer Chiba that briefly surpassed the former in terms of market capitalization earlier this year. Unlike traditional cryptocurrencies, memes are not usually judged based on the benefit they provide to users. Instead, more emphasis is placed on the currency's ability to attract high community participation. What can you do next to identify trusted and fake meme coins?

Learn how to spot fake and credible memes

Project Objective

Although the focus is not on utility, it is a good sign when the community that supports the meme coin project has something in common, apart from the desire to make a profit. However, it is dangerous when the goal of the entire community is to inject the value of the currency by encouraging new investors to buy the token in the hope that it will push the price higher. For example, SHIB community members collectively share the love of Shiba Inu dogs so that part of their goal is to raise money to save this type of dog. Moreover, the project has taken another step forward to implement a decentralized exchange called ShibaSwap, in an effort to provide a bit more benefit to token holders.

The track record of the development team

He should know if they are familiar with the crypto industry. Reputation is a vital factor to consider when determining the viability of a product or platform. Hence, it is advisable to disclose the identities and records of the primary contributors to the project. Note that it may be impossible to find information about members of the development team due to their decision to remain anonymous. In such cases, you may be exposed to a scam because you don't know anything about the developers.

How to safely invest in meme coins?

There are now more than 2,500 meme coins all vying for the attention of cryptocurrency investors. Hundreds of them contain the word "inu" in their names. While many may seem legitimate, the majority of meme-inspired cryptocurrencies are simply scam projects designed to take advantage of the rising trend of meme currency. You can reduce the risks involved by making sure that the project is not prone to rug-pull scams.

For those unfamiliar with the term, a rug pull occurs when development teams suddenly sell all of their cryptocurrency after raising prices. Investors are the ones who have pulled the rug out from under it, leaving them flat as the price of that currency suddenly drops to zero. The Squid token and Snow Dog are two of the latest examples of meme coins that have ended up pulling the rug under investors' feet.

How to trade meme coins?

When you find a purchasable meme coin, the next thing you have to consider is how to properly trade this type of volatile asset. Remember that speculation fuels meme prices. Hence, you will likely have to deal with high volatility. With that in mind, here are some ways to invest in meme coins:

Diversify your investments: Try as much as possible not to put all your eggs in one basket. In other words, avoid investing all of your money in any single meme. Instead, adopt a more measured investment strategy. A portion of your wallet should be allocated to one or several meme coins, while the rest can be distributed to more established and stable crypto-currencies. A good amount to invest in memes is around 5% of your entire portfolio. So if your portfolio is around $10,000, the maximum you should invest in one meme is $500.

Storing memes: If you are sure about the viability of meme coins, you can decide to choose a long-term investment plan where you hold your position regardless of short-term price fluctuations. In the case of shiba inu and dogecoin, both cryptocurrencies took a number of years before their value increased.

Track community sentiment on social media: Don't forget that marketing leads to meme success. It is recommended to monitor community participation and gauge market sentiment to predict price movements. You can do this by visiting Reddit, Discord, and Twitter and seeing what kind of community is built around the project and how many mentions it gets first hand. Other tools for measuring sentiment include using subscription services offered by companies like Intotheblock or The Tie, or "freemium-based" platforms like Santiment and LunarCrush.

Don't get caught up in FOMO: When investing or trading meme coins, it is essential to avoid decisions based on emotion fueled by FOMO or greed. Be as objective as possible when dealing with cryptocurrencies, especially meme coins. Will you buy the meme coin at its highest price, or at a more favorable entry point? H