Investors in the world of cryptocurrency are willing to pay exorbitant amounts to obtain a significant portion of newly-released meme coins in the hopes of getting in on the ground floor.
Ultimately, the decision proved to be profitable for the individual, as they are now in possession of a significant profit amounting to several hundred thousand dollars.
Meme Coins: A Potentially Lucrative Investment Trend
The original meme coin – Dogecoin, was originally designed as a parody of cryptocurrencies. With that said, several meme coins – including DOGE, have not only generated significant returns for investors – but some are now multibillion-dollar projects.
This year has brought another meme coin frenzy with various tokens showing huge gains in recent weeks and opportunities across the market.
However, meme coin investment also presents a significantly higher risk than other crypto niches with the tokens subject to increased volatility, sudden peaks and troughs, and having a larger number of scam operators.
Recently, data from the blockchain indicates that a trader paid a staggering 64 ETH in transaction fees on Monday to purchase 84 ETH worth of FOUR, a newly-minted meme token that likely derives from the popular “4” meme on Crypto Twitter.
As a result of paying 64 ETH in transaction fees, the trader’s total cost for acquiring $156,000 worth of FOUR tokens amounted to over $120,000. Despite the high costs, some individuals noted that the trader was only the second buyer of FOUR tokens, and as a result, has an unrealized profit of nearly $240,000.
According to DEXTools, FOUR tokens generated $136 million in trading volumes on the first day and currently have a market capitalization of $30 million. Additional on-chain data reveals that early FOUR buyers, including the recent trader, are currently profiting from $240,000 to $2 million. These large profits explain why traders are willing to pay such high fees to acquire these tokens.
The current trend in the cryptocurrency market is to seek out joke-based investments rather than fundamental ones, resulting in higher gas fees on the Ethereum blockchain.
The term “gas” in Ethereum refers to the amount of ether paid by users to guarantee that their transactions are prioritized by network validators and included in the earliest block.
These validators are incentivized to include transactions with the highest fees rather than processing them in a first-come-first-served basis. This means that fees for popular tokens can frequently amount to thousands of dollars.