When Retail Investors Start Writing the Script: Behind the Meme Coin Roller Coaster, Global Financial Logic Is Being Rewritten

During the National Day holiday, while the A-shares market was closed and stock traders were crowding tourist attractions, a wilder game was unfolding in the crypto world.

Within the ecosystem of a leading exchange, several tokens that seemed like jokes—Meme4, PALU, and something called “Exchange Life”—saw their market caps multiply dozens of times within days. Early entrants saw their account balances easily surpass a million dollars. The Chinese-speaking community exploded with excitement, and Twitter was flooded with cheers for the “wealth code.”

Then on October 9, everything changed.

The free fall began. Some coins evaporated 95% in a single day, over 100,000 people were liquidated, with a total amount of $621 million. The legend of overnight riches instantly turned into a live broadcast of bitter losses for retail investors.

I know this script too well. I’ve seen it on Wall Street, and in Lujiazui.

Remember the GameStop saga?

In 2021, Reddit retail investors banded together to squeeze Wall Street shorts, sending the stock price of a nearly bankrupt game retailer soaring. Short sellers lost so much they questioned reality. The US SEC chairman called it a “milestone in behavioral finance”—no matter how ridiculous the price, as long as the trading is real and the information is transparent, it’s “just part of the market.”

Americans are straightforward: Let bubbles happen, because bubbles themselves are catalysts for market evolution.

If this Meme coin frenzy happened on Nasdaq? Wall Street would launch a “Meme Stock ETF,” packaging social media hype as investment factors to sell to you; The Wall Street Journal would write lengthy articles praising the “victory of retail capitalism”; The SEC would investigate “social media market manipulation” and ultimately conclude: This isn’t fraud, it’s a collective financial reaction driven by group sentiment via algorithms and social sharing.

In China? The script is totally different.

If “Exchange Life” appeared on the Shanghai Stock Exchange, regulators would immediately issue risk warnings, media would call for rational investing, and the whole thing would be defined as a “speculative market anomaly” and used as an investor education case study. Stability comes first; excitement is allowed, but must be orderly. Innovation is welcome, but you must bear the risks yourself.

But Meme coins live in a third universe

The magic of the crypto market is—it’s not regulated by the SEC, nor by the CSRC. This is a no man’s land: a gray financial experiment zone self-organized by code, liquidity, and narrative.

Here, the American style of social speculation mechanism (viral information diffusion + collective momentum) and the Chinese grassroots wealth mentality (resonance + sense of community participation) are strangely mixed together.

Exchanges are no longer neutral platforms, but “narrative machines”; KOLs are no longer bystanders, but price amplifiers; retail investors get hyped up in cycles of algorithm and consensus, then burn themselves out.

The most fundamental change is: price is no longer determined by cash flow, but by the speed of narrative and the density of consensus.

We’re witnessing the birth of “emotional capital”—a form of capital with no financial statements, just cultural symbols; no fundamentals, just consensus curves; not seeking rational returns, only emotional explosions.

When algorithms fail, emotion is currency

The data is brutal: in the first nine months of 2025, 90% of top Meme coins crashed in market cap; in the second quarter, 65% of new tokens lost over 90% of their value within six months.

It’s like a digital gold rush—most gold diggers lose everything, only the shovel sellers always win.

But the core problem is: when money starts telling stories, the underlying logic of global finance is being completely rewritten.

In traditional markets, price reflects value;
In crypto markets, price creates value.

This is the ultimate expression of decentralization—and perhaps the ultimate form of de-responsibilization. When narrative replaces cash flow, and emotion becomes the asset pricing standard, each of us becomes a lab rat in this experiment.

Where’s the way out?

The Web3 industry stands at a crossroads. Should it continue indulging in the short-term frenzy of “emotional capitalism,” or shift towards the long-term construction of a “value-driven ecosystem”?

The real solution requires:

• Strengthening community governance mechanisms
• Introducing more transparent regulatory frameworks
• Establishing systematic investor education

Only this way can decentralized technology truly empower global financial fairness, rather than become a tool for a few to exploit the many.

Next time you see a KOL hyping a “100x coin,” ask yourself:

Am I participating in financial innovation, or just paying for someone else’s financial freedom?

When money starts telling stories, what you need most isn’t FOMO—it’s the ability to think rationally.