Comparison of NFT and Memecoin development between past and current bull markets

Author: Neptune Mutual

Compilation: Plain Language Blockchain

In recent years, memecoins and NFTs have become noteworthy assets in the encryption world.

Memecoins are a type of cryptocurrency inspired by internet memes, which have gained considerable attention and garnered millions of followers. The support from the community and the buzz on social media have driven a significant rise in their prices. On the other hand, NFTs are blockchain-based digital assets that represent ownership of unique items such as artwork, music, or collectibles. Unlike memecoins, NFTs often have some utility within their ecosystems.

The Bull Market is known for its price pump and plays a crucial role in the rise of assets. In a bull market, investors are more willing to take risks and try novel assets, leading to the surge in popularity and value of memecoins and NFTs. This environment drives innovation and brings a wider audience into these digital assets, highlighting their potential and risks.

In this article, we will explore the dynamics of memecoins and NFTs in previous bull markets and the current bull market.

1. Memecoins in Previous Bull Markets

In the previous bull market from 2020 to 2021, the adoption of Web3 by institutions became a well-known fact. Bitcoin broke the previous high, reaching $64,000. This pump marked a shift in user perception, triggering speculative behavior and leading to the adoption of cryptocurrencies by many institutions and organizations.

At this stage, memecoins like Dogecoin and Shiba Inu have become important players in the cryptocurrency field. The prices of these memecoins have soared to unusually high levels, driven by social media frenzy and retail investors’ fear of missing out (FOMO).

Dogecoin was initially created as a joke in 2013, but gained serious attention in 2021. In fact, Dogecoin’s price has risen by 3300%, making it the tenth largest cryptocurrency by market capitalization. In May 2021, it reached its all-time high of $0.731. This is largely due to the support of celebrities such as Elon Musk and Mark Cuban.

Shiba Inu Coin, often referred to as the ‘Dogecoin killer’, follows closely in the footsteps of Dogecoin’s popularity and rapidly growing meme culture. Platforms like Reddit, Twitter, and TikTok have played a crucial role in spreading memes, generating viral interest, and driving up prices.

Many investors view these coins as a lottery, hoping to profit from short-term gains rather than long-term investment. The influence of media reports is significant, amplifying price fluctuations through sensational headlines and viral tweets.

2. Memecoins in the current bull market

Today’s Bull Market begins around April 2024, and the popularity of new memecoins such as PEPE continues to rise, and they join the ranks of previous meme-inspired Crypto Assets. Based on the “Pepe the Frog” meme, PEPE quickly gained attention for its fun concept and active community. **

The market dynamics have changed, and investors have become more cautious. They are no longer blindly chasing any memecoin, but focusing on the potential use of the coin, the strength of the community, and the financial model. Compared to previous periods, this has made the memecoin market more stable.

Investor sentiment seems to have changed as well. People are not only interested in quick profits, but also in the long-term prospects and community activities of these coins. The Memecoin community has become stronger and more actively promoting their coins, sometimes even creating real-world projects and events.

Despite investors being more cautious and vigilant, they still became victims of multiple memecoins’ attacks. Take the hacker attack on NORMIE operated by CONDOM and the rugpull as an example.

3. NFTs in previous bull markets

**During the previous bull market, the popularity of NFTs (Non-Fungible Tokens) soared, becoming a major trend in the encryption world. Although NFTs were publicly issued after being recognized and adopted by the EIP-721 standard in 2017, that year was a year of experimentation and development. The launch of Cryptopunks and CryptoKitties was very eye-catching at that time, helping to shape the appearance of the NFT ecosystem.

The exponential growth of NFTs occurred during the bull market from 2020 to 2021. Key trends during this period included the rise of digital art and collectibles. Platforms like CryptoPunks and Bored Ape Yacht Club became extremely popular, offering users the ability to own and trade digital avatars. These NFTs often serve as symbols of identity and collectibles within digital communities.

The market is growing rapidly, thanks to the novelty of owning digital assets and the convenience of trading on blockchain platforms. Media coverage and celebrity endorsements have driven public interest, bringing NFTs into the mainstream and encouraging more people to explore this new form of digital ownership.

High-profile sales have made headlines, with some NFTs selling for millions of dollars. Beeple’s digital artwork “Everydays: The First 5000 Days” sold for a record-breaking $69.3 million in March 2021. In 2021 alone, approximately $41 billion worth of cryptocurrency was consumed in the NFT market, demonstrating its rapid rise and massive market interest.

In terms of attacks, Stazie lost about 1 million dollars in phishing scams in August 2021. Iconics, Evolved Apes, Bored Bunny, and Frosties are some fraudulent projects manipulated after the bull market.

4. NFTs in the current bull market

After the last Bull Market, the NFT market experienced a sharp decline, leading to the NFT crash in 2022. Many NFTs, including popular works, performed weakly and reached their lowest prices.

Although there were some new interests emerging around 2023, the NFT market may only partially recover in the bull market of 2024. However, we are unlikely to see the same hype and chart explosion as in 2021.

An important development in the current bull market is the evolution of NFTs, accompanying new trends and expanding them into the gaming, metaverse, and sports sectors. This allows players to own and trade unique items in virtual worlds and games. Similarly, traditional brands entering the NFT space may bring a boost to it. For example, Starbucks launched its first paid NFT series in March 2023, selling 2,000 digital stamps at a price of $100 each in just 20 minutes.

Pudgy Penguins is a classic example of an NFT project that has caused a sensation recently. Although it was launched in August 2021, it gained the most attention in the first few months of 2024. These PFT-themed artworks have skyrocketed in popularity because of their attractive art style and strong community.

In short, investors’ attitudes are maturing, placing more emphasis on the practical benefits of NFTs rather than speculative trading. In addition, there are now many smaller NFT projects that are more affordable and have practical uses, rather than just a few high-value collectibles like in 2021.

The industry still faces challenges such as rug pulls, phishing attacks, smart contract vulnerabilities, DeFi wallet issues, etc., which may affect user confidence. For example, in September 2023, a phishing attack on OpenSea exposed security issues that need to be followed.

Similarly, MetaDragon is the most recent case of a hacker attack caused by a smart contract vulnerability.

5. Comparative Analysis

Compared to the previous and current bull market, meme coins and NFTs have shown some similarities and differences.

In two periods, meme coins like Dogecoin and PEPE highly rely on social media hype and community support to drive interest and prices. However, current investors are more cautious, evaluating long-term value and community engagement, rather than just chasing speculation.

The trend of NFTs has also changed. The enthusiasm for high-priced sales and NFTs as collectibles has cooled down. Nowadays, NFTs are more focused on practicality in games, Metaverse, and integration with traditional brands, leading to a more balanced growth model and more practical projects.

In terms of security, both markets have experienced hacker attacks and fraudulent activities resulting in millions of dollars in losses. During both bull runs, fraud, phishing, and smart contract vulnerabilities were exploited to impact digital assets. Addressing these challenges is crucial to maintaining investor confidence in these assets.

Legal meme coins and NFT projects continue to strengthen their defense capabilities by conducting smart contract audits and vulnerability fixes. As a user, you need to remain vigilant and check for potential vulnerabilities in projects. Reviewing the project’s community and user sentiment may be helpful.

In addition, the use of multisignature wallets (which require multiple approvals to conduct transactions), advanced consensus mechanisms, and hardware security modules are crucial for building a more secure infrastructure.

For owners of digital assets, another effective way to protect their assets is to consider DeFi insurance. It provides financial protection against losses due to hacker attacks, exploit vulnerabilities, or other unexpected security flaws.