Memecoins Investment Strategy Analysis

Why Choose Memecoins?

Beta Effect

Some memecoins have a high beta value relative to major crypto assets, making them an attractive investment choice. For example, cultural tokens within the Solana ecosystem can provide investors with leveraged exposure to Solana without increasing the risk of liquidation.

The signal we are focusing on is when the 30-day beta value exceeds the 90-day rolling beta value. In this case, the average 30-day and 60-day returns of certain memecoins may reach 124% and 413%, respectively.

The price trend chart shows that changes in risk appetite often happen quickly, and memecoins can significantly outperform underlying assets in a short period. This highlights the importance of buying at the right time.

Typically, the explosive growth of memecoins occurs simultaneously with their underlying assets rising by more than 5% within a week. In this case, the average returns of certain memecoins are as follows:

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

However, in about 1/3 of the cases, memecoins actually decline, which indicates that the performance of the underlying asset does not guarantee the outstanding performance of the memecoin.

Correlation analysis shows that memecoins are usually highly correlated with their underlying assets. However, during periods when memecoins perform well, this correlation often weakens.

On-chain Data Analysis

In addition to price performance, on-chain data analysis can also provide valuable insights. We compared the following metrics of some top memecoins:

• Token holder 90-day growth rate
• Median and Average Holding
• The proportion of wallets holding values over $1000 and $100,000
• The large holder ( had a retention rate of over $100,000).
• The net inflow/outflow situation of large holders on DEX

These indicators help to understand the quality and beliefs of the Token holder base.

Other Considerations

We will also pay attention to:

• Trading Liquidity
• The number of significant pullbacks experienced by the token
• The open contract volume ( for the Token ) listed on major trading platforms.

Community and Faith

When evaluating memecoin projects, community factors are also very important:

• Potential interest from a global audience
• Engaging narratives and community slogans
• Strong belief and sense of belonging among community members
• Leadership and coordination capabilities of the project
• Signs of cultural infiltration

Some projects are starting to attract young user groups through platforms like TikTok, and the most successful memecoin communities often have excellent marketing capabilities.

Valuation and Entry Timing

Evaluating the "fair value" of a memecoin can consider:

• MVRV ratio ( is the ratio of market value to realized value )
• RSI and other momentum indicators
• The position of the price relative to the key moving average line
• Social sentiment indicators such as Google Trends

Macroeconomic Environment

Memecoins are highly sensitive to liquidity conditions. Favorable liquidity and economic environments, combined with a return of risk appetite sentiment, are key to allocating memecoins.

Conclusion

This article provides a memecoin investment framework, covering reasons for selection, fundamental analysis, valuation methods, and timing for buying and selling. However, investing in memecoins still carries high risks, and investors should proceed with caution and manage their positions wisely.