Co-founder of Mechanism Capital Andrew Kang has drawn attention to the potential profitability of a new class of memecoins known as "culture coins," which go beyond the usual animal- and humor-themed meme tokens and explore deeper cultural values including politics, religion, and lifestyle.
Kang noted in an April 7 article on X that by capitalizing on the strong identities and beliefs of their communities, these culture-centric memecoins have the potential to perform better than more conventional memecoins like Dogecoin or Shiba Inu.
Strong identities and values instinctively lead communities to share their passions for their way of life and to persuade others to share them.
Kang said, "They are viral by nature."
"The ideologies of these communities can be purely about politics, religion, consumer goods, sport, way of life, or can be a mixture of all," Kang said, highlighting the coins' virality and ideological diversity.
He pointed to the explosive rise in popularity of two Solana-based memecoins, Doland Tremp (TREMP) and Jeo Boden (BODEN), as proof of the allure of culture coins, particularly among political communities.
With its launch on March 9, BODEN's value has increased dramatically—by over 700,000%—to reach a market valuation of $473 million.
TREMP, with a $73 million market capitalization, has experienced significant gains as well, although not being as explosive as BODEN.
Beyond politics, Kang believes there is potential in memecoins linked to consumer brands like Mechanism Capital's investments in ZYN and MOUTAI.
He contrasts these brand-affiliated coins with animal-themed coins to highlight how they could benefit from the lifestyles connected to the brands for increased virality.
Kang compares investment in memecoins to investing in conventional assets, pointing out that assets that enjoy broad acceptance tend to yield the largest returns.
Regarding memecoins' impact, the crypto community is still split.
Critics contend they provide a speculative risk that subverts the fundamental ideas of blockchain technology, whereas BitMEX co-founder Arthur Hayes sees them as a "net positive" for blockchain networks.
Memecoins have shown to be a profitable segment of the cryptocurrency market despite these conflicting views; in the first quarter of 2024, the top 10 memecoins saw average gains of 1,312.6%.
According to CoinGecko researcher Lim Yu Qian, memecoins were the most profitable segment of the cryptocurrency market during that time due to their success, which was noticeably better than other crypto narratives.
April 2024, Cryptoniteuae