When Narrative Becomes an Asset: The Truth of Encryption Finance Exposed by the Meme Coin Craze

This holiday, the heat of the encryption world exceeded expectations. Several Meme coins within a leading exchange's ecosystem saw their market capitalization multiply several times in just a few days ------ these tokens that sound like a joke have allowed some early participants to easily exceed a million dollars in profits. Cheers from KOLs on social media are rising and falling, as if everyone has discovered a new continent of finance.

The duration of the carnival was very short. In the following days, these coins began to plummet wildly, with some individual projects experiencing a daily drop of 95%. Data shows that over 100,000 traders faced liquidation, with total losses reaching up to $621 million.

The dream of getting rich overnight has turned into a bloody bill in the blink of an eye.

I have seen this kind of performance in many financial centers around the world. Do you remember the GameStop incident in 2021? Retail investors on Reddit teamed up to push the stock price of a company on the brink of bankruptcy up a thousand times, leaving short-selling institutions in dire straits. That incident was referred to as “a milestone in behavioral finance.” Although the price was absurd, as long as the trading was real and the information was sufficient, it was considered “part of the market.”

The underlying logic of international finance is: to let bubbles occur, because bubbles themselves are the catalysts for market evolution.

If this Meme coin storm happened on a traditional exchange, the story would be completely different. New financial products would emerge (such as index products that quantify social hype into investment factors), financial media would extensively discuss “a new phase of retail capitalism”, regulatory bodies would initiate research on “social media market manipulation”, and ultimately, they might conclude: this is not fraud, but a collective financial reaction formed by group emotions through algorithms and social networks.

The uniqueness of the encryption market lies in the fact that it simultaneously carries the characteristics of two financial logics: the information diffusion mechanism of the international market (fast, broad, emotion-driven) and the participatory psychology of grassroots communities (resonance, organization, collective decision-making). The result is a unique ecosystem: trading platforms are no longer neutral intermediaries but have become “narrative pushers”; opinion leaders are no longer bystanders but have become price amplifiers; retail investors, caught in the cycle of algorithms and consensus, both indulge in self-celebration and self-consumption.

The most fundamental change occurs in the pricing mechanism. In traditional finance, prices are determined by cash flow; in the encryption market, prices are determined by the speed of narratives and the density of consensus. We are witnessing the birth of “emotional capital”------a new form of capital that has no financial statements, only cultural symbols; no fundamentals, only expectation curves; not pursuing rational returns, but only the release of emotions.

Numbers don’t lie. In the first nine months before 2025, 90% of the top Meme coins' market capitalization has collapsed; in the second quarter, 65% of new tokens lost more than 90% of their value within six months. This is reminiscent of the gold rush in the digital age------the vast majority of prospectors ended up bankrupt, while only those selling tools made a profit.

But this is precisely the crux of the matter: when currency starts to tell a story, the underlying logic of global finance is being rewritten. In traditional markets, prices reflect value; in the encryption market, prices create value. This is both the ultimate expression of decentralization and possibly the dangerous boundary of derisking. When narrative replaces cash flow, and emotions become assets, every participant becomes a guinea pig in this experiment.

The Web3 industry is now at a crossroads: should it continue to indulge in the short-term “emotional frenzy”, or start building a “value-driven long-term ecosystem”?

The real solution is actually very clear: Strengthen community governance mechanisms, introduce more transparent framework designs, and establish effective investor education. Only in this way can decentralized technology truly promote the democratization of global finance, rather than becoming a tool for harvesting profits from unsuspecting investors.

Next time when a big influencer is crazy about promoting “hundred times coins”, it's worth asking yourself a question: Am I participating in a financial innovation, or am I footing the bill for someone else's financial freedom? When currency learns to tell stories, your most scarce ability is not to chase FOMO, but to maintain the composure to think clearly.