Memecoins Investment Strategy Analysis

Memecoins, as a small part of a cryptocurrency investment portfolio, have unique investment value. This article will analyze the investment strategies of memecoins from multiple perspectives.

Beta Effect

Some memecoins have a high beta value against Layer 1 (L1) assets, providing a leveraged effect on L1 assets without using leverage. For example, when BONK's 30-day beta exceeds its 90-day rolling beta, it often experiences significant gains.

The surge of BONK usually occurs simultaneously with SOL rising more than 5% within a week. In this case, the average return rate of BONK is as follows:

• 1 Week Average Return 26%
• 30-day average return 141%
• 60-day average return 512%

It is important to note that in about 1/3 of cases, BONK actually declines, indicating that SOL's performance does not fully guarantee BONK's outstanding performance.

The correlation between BONK and SOL is usually high, but during periods when BONK performs exceptionally well, this correlation often weakens.

On-chain Data Analysis

By analyzing on-chain data, you can understand the quality and belief of the memecoin holder base. Here are a few key indicators:

1. Token Holder 90-Day Growth Rate
2. Median and Average Holdings
3. The proportion of holders with more than $1000 and $100,000 holdings
4. Large Holders ( once held >$100k) retention rate
5. Net inflow/outflow of large holders to decentralized exchanges

These indicators help assess the potential of memecoins and the degree of belief among holders.

Other Considerations

In addition to on-chain data, attention should also be paid to:

• Trading Liquidity
• Experienced multiple significant pullbacks
• Open interest ( for tokens listed on mainstream trading platforms )

Community and Faith Factors

The success of memecoins largely depends on the strength and belief of their community. Attention should be paid to:

• Resonant narratives and community slogans
• Strong belief and sense of belonging among community members
• Community leadership and coordination skills
• The degree of integration with culture
• Social media promotion strategies, such as TikTok, etc.

Value Assessment

Evaluating the "fair value" of a memecoin can be done through the following methods:

1. MVRV Ratio: When MVRV < 1, it may be close to a local bottom.
2. Momentum Indicator:
   • RSI: Below 30 may be oversold, above 70 may be overbought
   • Moving Average: Analyzing the position of the price relative to key moving averages.
3. Google Search Trends: Understanding Changes in Public Interest

Macroeconomic Environment

Memecoins are very sensitive to liquidity conditions and risk appetite. A favorable macro environment is key to successfully investing in memecoins.

Conclusion

Investing in memecoins requires a comprehensive consideration of multiple factors, including beta effects, on-chain data, community strength, value assessment, and the macro environment. Nevertheless, memecoins still belong to high-risk assets, and investors should treat them with caution and manage risks appropriately.