Analysis of Memecoins Investment Strategies

Memecoins, as a special category in the cryptocurrency market, have attracted the attention of many investors. This article will explore how to analyze and invest in Memecoins from multiple perspectives.

Beta Value Analysis

The popularity of certain Memecoins is largely due to their high Beta value against Layer 1(L1) assets. In simple terms, a moderate allocation to Memecoins like BONK can provide leverage on L1 assets without actually using leverage.

The signal we are interested in is when the 30-day Beta exceeds the 90-day rolling Beta. When this occurs, the average 30-day and 60-day return rates for BONK are 124% and 413%, respectively, with medians of 45% and 57%, respectively, (.

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

• 1-week average return 26%, median 14%
• 30-day average return 141%, median 11%
• 60-day average return 512%, median 27%

It is important to note that in about 1/3 of the cases, BONK actually declines, which indicates that the performance of SOL does not guarantee the excellent performance of BONK.

The correlation between BONK and SOL is usually high, but during periods when BONK performs well, such as Q4 2023, Q1 2024, Q4, and this April ), this correlation often weakens.

On-chain Data Analysis

In addition to price performance, on-chain data analysis is also an important method for evaluating the quality of Memecoins. We focus on the following indicators:

1. Growth of Token Holders (90 days )
2. Median and Average Holdings
3. Percentage of holders with >$1000
4. Percentage of holders with >$100k
5. Whale Retention Rate
6. Giant Whale DEX Net Inflow/Outflow

These indicators can help us understand the relative quality and confidence of the Token holder base.

Other Key Factors

In addition to on-chain data, we also focus on:

• Sufficient trading liquidity
• Experienced multiple pullbacks of over 50%
• Open Interest

Community and Faith

Community power is crucial for Memecoins. We are looking for:

• Resonant narratives and community slogans
• Strong belief and sense of belonging
• Leadership and Coordination Sense
• Signs of cultural integration
• Social media promotion capability

Fair Value Assessment

One way to assess the "fair value" of Memecoins is to analyze the relationship between realized value and market value, specifically the MVRV ratio. When the MVRV ratio is below 1, it may indicate that it is close to a local bottom.

Kinetic Analysis

In the absence of fundamental factors, momentum indicators can help determine the timing for buying:

• Relative Strength Index ( RSI )
• Moving Average
• Google Search Trends

Macroeconomic Environment

Memecoins are highly dependent on favorable liquidity and economic conditions. The return of risk appetite sentiment and "animal spirits" are key factors.

Conclusion

Investing in Memecoins requires a comprehensive consideration of multiple factors, including Beta values, on-chain data, fair value, momentum indicators, and the macro environment. Nevertheless, Memecoins are still considered high-risk assets, and investors should proceed with caution and manage their positions wisely.