• PEPE, FLOKI, and BABYDOGE are all being held by major whales.
• The risk of this concentration is boosting the attractiveness of DOGE and SHIB.

Regulators around the world are often advising consumers that investing in digital currencies is a very risky move, but what they may fail to hammer on is that investors in PEPE, FLOKI Inu, and BabyDogecoin or memecoins, in general, are riskier. While top advocates in the industry have argued tirelessly with regulators on the risky nature of Bitcoin and other digital assets, there is no argument as to the potential risk inherent in memecoins.

Memecoins had a significant rally recently with the launch of PEPE tokens taking centerstage. There were reports of just a few whales holding large amounts of the token in what is both against the ethos of decentralization and harmful to the unsuspecting retail holders. 

A recent Coindesk report confirmed the HODLing risks for smallholders with analysts confirming the susceptibility to price manipulation as a result of the massive accumulation from some whales. One particular buyer was noted to have acquired $1,200 worth of PEPE tokens which grew parabolically to $9 million.

Memecoins when launched have a very high amount of volatility. This was confirmed through Solana’s first memecoin, BONK when it made its debut earlier this year. The tokens are bound to enjoy a very massive price growth based on exaggerated hype, but this hype wanes off slowly, with early buyers selling off their bags.

The fear remains for PEPE. While the project has been suspected as a fraudulent one, the dump-off from whales such as the one referenced earlier can quickly lead to the demise of the token. The market liquidity of PEPE remains very low, which means one large holder can easily sweep off the entire liquidity pool in a way that may lead to the demise of the project.

Pitching trusted memecoins

There are tons of memecoins around today and according to the report, there are whales that are specialized in accumulating large quantities of these highly unstable tokens. Perhaps for the potential for high profit, a particular whale has a large holding of PEPE, FLOKI, and BabyDogeCoin.

With each of his holdings running into millions, on-chain data suggests that this whale has up to $43,000 in ETH, a sum that may be to take advantage of any other relatively new project.

The massive instability in the liquidity of memecoins that are yet to be established may serve as a cushion to restrain investors to the more stable ones. These stable memecoins include Dogecoin (DOGE) and Shiba Inu (SHIB). Notably, these memecoins have passed through their worst stages, and have market capitalization running into billions with good liquidity support from exchanges.

In fact, these two memecoins are already pivoting away from being fun tokens and are embracing massive utility and a new identity that can help stand the test of time.