Meme Coins: The Ultimate Guide to the Risky Cryptocurrency Trend

Meme coins have evolved from internet jokes into multi-billion dollar assets, attracting everyone from casual investors to major financial institutions and the sitting U.S. President.

Meme coins, a class of cryptocurrencies inspired by internet memes and viral trends, have captivated the attention of traders, ranging from casual investors to major financial institutions. These assets, often lacking intrinsic value or utility, have soared and crashed dramatically, attracting scrutiny from authorities over their potential to facilitate fraud.

Anwar Sheluchin, a doctoral candidate at McMaster University who studies financial governance and digital currencies, highlighted the speculative nature of meme coins in an interview with Investopedia.

"Meme coins are still inspired by internet culture and trends and supported by online communities [and] hype cycles," Sheluchin said. But "the hype around them seems to operate in shorter time frames than before."

Sheluchin noted that many coins, such as the one inspired by the so-called "Hawk Tuah girl" and her 2024 viral fame, "had prices rise and plummet within hours"—not days or weeks.

Meme coins, initially conceived as playful parodies, have gained traction due to speculative interest, with Dogecoin (DOGE) leading the way. While some, like Shiba Inu (SHIB) and Floki Inu (FLOKI), have garnered strong followings, the vast majority have not.

For instance, days before his inauguration in January 2025, President Donald Trump released a $TRUMP token, marketing it as an "expression of support" for his views. The token's price surged more than 200% before crashing to below its offering price in a matter of days. This rollercoaster pattern is the rule, not the exception, for meme coins.

Authorities have flagged major criminal risks associated with meme coins. In October 2024, U.S. authorities charged 18 individuals and major crypto firms with various frauds against everyday investors. These schemes depended on central players in the sector—so-called "market makers"—who artificially inflated trading volumes and prices through wash trades to create fake transactions and suggest more buyer interest for unsuspecting investors.

"The 2024 charges are a stark reminder of how vigilant online investors must be and that doing your homework before diving into the digital frontier is critical," said Acting U.S. Attorney Joshua Levy. "People considering making investments in the cryptocurrency industry should understand how these scams work so that they can protect themselves.”

One defendant in the October 2024 crypto fraud case unwittingly messaged undercover investigators that he and his cohort's "objective on the secondary markets" (where everyday traders buy their meme coins) was to find "other buyers from the community, people you don't know about or don't care about" because "we have to make [the other buyers] lose money in order to make [a] profit."

Other well-known hazards of putting your money into these coins include:

The Bottom Line

Traders should approach meme coins with extreme caution, more akin to gambling and entertainment than an investment for your portfolio. "The speculative nature of meme coins, combined with their susceptibility to fraud (pump-and-dump schemes)," Sheluchin said, "poses significant risks to retail investors, especially those who are inexperienced."