Systematic Memecoin Investing

This report was originally published as an Enterprise tier report on March 27, 2024.

Key Insights

• Memecoin explosions typically occur after a measurable upswing in larger assets such as smart contract platforms.
• Due to their role at the far end of the speculative risk curve, market drawdowns occur earlier in memecoins, thus acting as a signal to the broader market.
• Knowing these fairly predictable role memecoins play in crypto cycles, one can encode a simple heuristic-based memecoin investing strategy that outreturns a market-cap-weighted basket of smart contract platforms by a factor of 28, or, if optimizing for memecoin investments on a velocity-weighted-bases, by a factor of 87.

Memecoins have historically been seen as a joke asset favored almost exclusively by retail and far out on the speculation curve beyond sensibility even for most crypto funds.

And that would be true. The volatility, lack of “fundamentals,” and general unseriousness are notoriously offputting for anyone with a semblance of fiduciary duty.