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- The meme coin mania is an early sign of the heightened crypto cash rotation and an impending market correction on the horizon.
- The existence of whale traders in some meme coin projects is a double-edged sword that every retail investor should prudently keep an eye on.
The meme coin industry has grown over the years from a joke-oriented sector to a respectable web3 ecosystem enabling mass adoption of digital assets. According to the latest market data, the meme coin industry has a valuation of about $62 billion and a daily average trading volume of about $30 billion.
As Crypto News Flash highlighted, the rise of Dogecoin (DOGE), which is supported by tech billionaire Elon Musk, and Shiba Inu (SHIB), which has a vibrant layer-two scaling solution dubbed Shibarium network has inspired hundreds of other meme coins. Moreover, meme coins are not regulated by any physical jurisdiction apart from the multi-chain smart contracts.
Closer Look at Meme Coin by Whales’ Percentage
According to a recent on-chain study released by Power Your Own Research platform, most of the meme coins are held by a few holders. Crypto whales are now confident in the meme coin industry due to the existence of vetted smart contracts and a democratized market.
However, Baby Doge Coin (BABYDOGE), a top-rated meme coin that emerged during the 2021 bull market, is heavily controlled by the crypto whales. Specifically, 99.7 percent of the BABYDOGE coins in the circulating supply are held by the top 10 holders.
Memecoin (MEME), a new meme coin based on metaverse gaming, is also largely dominated by crypto whale investors. According to the PYOR report, 96 percent of MEME is held by the top ten holders.
Similarly, Shiba Inu (SHIB), the leading meme coin ecosystem on the Ethereum network, has the majority of its supply held by whale traders. According to the report, 75 percent of SHIB in circulating supply is held by the top ten holders.
Democratized Meme Coins
Some of the meme coins that are highly democratized include Solana-based led by BONK. According to the PYOR report, only 14.3 percent of BONK in circulating supply is held by the top-ten holders. The dogwifhat (WIF), which was recently listed on the Binance exchange has only 22.6 percent of its supply held by the top holders.
Similarly, the MAGA (TRUMP) meme coin has only 19.9 percent of its circulating supply held by the top ten whale traders.
Impact of Crypto Whales in the Meme Coin Industry
The impact of whale traders in the meme coin industry is profound and double-edged. On one hand, the presence of whale investors in the meme coin industry largely improves the respective liquidity. Furthermore, most whale traders have a long-term perspective and provide liquidity for short-term investors and swing traders.
On the other hand, the presence of whale traders in the meme coin industry increases the risk of severe sudden market dumps and crashes. Consequently, it is prudent for retail meme coin investors to closely monitor the whale traders to avoid getting rekt in the process.
