What to Look for When Trading Memecoins: A Guide to Spotting the Next Gem

What if I told you the next memecoin that could 100x is just around the corner, waiting to make someone a fortune? It could be you — but only if you know how to spot it.

The memecoin supercycle is already gaining steam, with many tokens outperforming even the most established cryptocurrencies. We’re seeing old memecoins making new ATHs while new “cats”(and dogs) explode onto the scene. Memecoins are no longer just a joke; they’re becoming a serious part of the crypto ecosystem, creating life-changing wealth for those who understand how to play the game right.

“The memecoin supercycle is not just a prediction about the future, it is already happening.” — Murad Mahmudov.

According to CoinMarketCap, only 42 tokens in the top 300 have outperformed Bitcoin (YTD ), and 13 are memecoins!

Recent memecoin rallies have been explosive. For example, $POPCAT went from obscurity to reaching a $1.5 billion market cap within months, and $Moondeng surged from $10 million to $320 million. Other notable mentions include $WIF, $BONK, $PUPS, $WZRD, $CAT, etc.

A key factor distinguishing this cycle is the growing consensus from institutions and retail traders that memecoins have become an integral part of the crypto ecosystem. Established memecoins now have enough liquidity to handle massive buy and sell orders, making them attractive to big funds.

But here’s the problem: navigating this space is risky, especially when every influencer is hyping the next “moonshot” that turns out to be a rug pull. If you’ve been burned before, I get it — I’ve been there too. Yet, the opportunities in this cycle are far from over.

If anything, we’re just getting started, and if you’re strategic, there’s still plenty of room to make real gains.

How to Spot the Next Memecoin Gem

1. Top Holder Movement (Whale Watching)
   Platforms like Solscan, Etherscan, and BscScan allow you to track the activities of large holders, also known as whales. Their accumulation or distribution can signal potential price movements. For example, SHIB’s early surge was fueled by significant whale purchases.

• Identify Key Players: Learn who the major holders are, as many high-profile wallets are publicly known. Tracking their historical patterns can offer valuable insights into market movements.

2. High Volume and Trading Activity

• Volume Spikes: Sudden increases in trading volume often indicate growing interest and possible price appreciation. A recent example is the meteoric rise of $WIF, which saw its trading volume soar with its price.
• Analyze Patterns: Use platforms like DexScreener or CoinGecko to analyze trading volume across various timeframes. This can help you spot potential trends and anomalies.

3. Cult Factor and Community Engagement

• Social Media Engagement: Memecoins live and die by their communities. Monitoring platforms like X (formerly Twitter), Telegram, and Discord can give you insight into sentiment and activity. A project without an active TG community is a red flag.
  Example: DOGE’s initial success was driven by its passionate community, while newer projects like POPCAT have seen massive viral growth through similar grassroots support.

4. Strong Memes

A good meme resonates with a wide audience and is easily shareable. A catchy meme can go viral and attract more investors, contributing to a positive feedback loop.

Shiba Inu’s popularity surged thanks to its relatable mascot and the support of its community, the “Shiba Inu Army.” Likewise, memecoins like $DOGWIFHAT and $POPCAT leveraged their memes to drive mass appeal.

5. Liquidity to Market Cap Ratio

A high liquidity-to-market cap (L/M) ratio indicates that the coin can be traded easily without major price swings, making it more attractive to investors. This can be monitored on platforms like DexScreener.
Example: Dex-based coins often feature smoother price movements, with high liquidity making them less vulnerable to manipulation.

6. Price Action (Technical Analysis)

• Use charting tools like TradingView to spot patterns like bullish flags, cup-and-handle formations, or other technical setups that hint at potential upward movements.
• Support and Resistance: Identify key price levels where the coin might find support or face resistance, which can offer clues to future price action.

7. Growing Holder Count

• A growing number of holders often correlates with a stronger network effect. More holders mean higher demand and can drive long-term price appreciation.
  Example: Coins like $PEPE have seen their holder base grow exponentially, contributing to sustained interest and price stability.

8. Market Cycle Consideration

• Memecoins often perform better during bull markets, when overall market sentiment is high. The 2021 bull run saw an unprecedented rise in memecoin popularity, with many coins like DOGE and SHIB achieving astronomical gains.

Missing out on Opportunities? Refine Your Strategy

It’s easy to feel regret when you miss out on these rallies, especially when you were close to discovering the gems early. I’ve been there too — I’ve missed opportunities and sold too early, only to see coins skyrocket afterward.

However, frustration isn’t the best mindset. Instead, focus on sharpening your approach and enhancing your strategy using the strategies discussed earlier.

Understand that you won’t get it right every time, and missing some opportunities is part of the game. What’s certain is that new opportunities will always arise.

Ultimately, kindly be advised that memecoins are highly volatile and it is easy to lose money if not approached with caution. A project can still tick all the boxes and end up failing.

What to Look for When Trading Memecoins: A Guide to Spotting the Next Gem was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.