DOGE. PEPE. AI altcoins. Every now and then a memecoin explodes in the stratosphere, and we all wonder how exactly this all happens. We sat down with the top executives of crypto exchange BTSE to get to the bottom of it. CEO Henry Liu and COO Jeff Mei gave us their honest look at the hype and hope behind the fear and greed that drive markets, be it crypto, commodities or plain old fiat currencies. TLDR – Henry and Jeff believe ‘retailization’ is an inevitability for the crypto industry and share insights from BTSE’s recent FUD & FOMO report.
Interview with Henry Liu, CEO of BTSE and Jeff Mei, COO of BTSE
Q: To help us get started, you’ve said many times that “retail” is here to stay. Can you dig into that, what does that mean?
Henry:
Certainly. We have always said that the adoption of cryptocurrencies by retail and the wider Web3 world is an inevitability. “Retailization”, it is this idea that the daily use of crypto in retail is growing, that Web3 is becoming more mainstream. The industry has encountered some pretty big pitfalls along the way – and no need to name names here – but we still don’t see that ultimate destiny changing at all. Maybe just the time horizon, until we see crypto actually integrated seamlessly into everyday life around the world.
Jeff:
Right. Even though the doubters got louder during this crypto winter and got a bigger share of the headlines, we’ve seen that negativity completely blindsided by the FOMO rallies for PEPE and AI altcoins, etc. There will always be this kind of FUD & FOMO its cycle in crypto – Fear, uncertainty and doubt fuel the downswings, then Fear Of Missing Out often drives the upswings. At TradFi they call this the fear and greed index. But overall, there is an upward trajectory to adoption. And these memecoin rallies always come back to remind us that there are plenty of revivals to come. We had a report recently on this FUD and FOMO dynamic, diving into the psychology of it all.
Q: Maybe we can use the hype around PEPE as an example. How did this token suddenly gain so much traction?
Henry:
The funds poured into the PEPE rally are heavily rooted in retail. And much of that is fueled by online sentiment and community. Pepe himself is a frog cartoon that has been a hugely popular internet meme for years. It has taken on different meanings in the process in different regions. This project basically taps into that existing fandom and offers a fun, almost silly way to interact with the wider fan community.
Jeff:
Yes, we should emphasize that the PEPE project website says it was launched “for the people” with no “formal team or roadmap” and that it is “for entertainment purposes only”. That’s to cover their backs, of course, but it’s also a pretty accurate representation of the situation. You can think of this whole hype train as a cultural and economic movement born out of the unique blend of technology, social media and a collective desire to democratize finance in the digital age. It’s actually fascinating.
Henry:
Right and it proves our point, that retail crypto adoption is an inevitability no matter what the TradFi experts say. The popularity of PEPE shows that retailization is here to stay, with a lot of unpredictability in the mix. And actually, the fact that PEPE is listed on major centralized exchanges has been a major contributor to the proliferation of PEPE coins because that gives private investors access to the coins. We also mentioned it on our exchange, kind of a power to the people movement. We want to give both institutional and retail investors access the coins they want to trade, with professional trading tools.
Question: What is your general opinion on memecoins? Aren’t they detrimental to the perception of the Web3 industry?
Henry:
We should be clear that memecoins are a hyper speculative and volatile class of crypto tokens. They lack practical use compared to more established tokens such as ETH (Ethereum) or SOL (Solana), where the tokens are designed to serve a wider ecosystem. Meanwhile, BTC is primarily seen as a store of value or means of payment, has a significantly longer track record, and the network is completely decentralized, which may not be the case with memecoin projects.
Jeff:
I would add that it has always been in human nature to speculate, and actually making money is a major motivator to keep our world going. So speculation in itself is not a moral issue, we just need to adopt the right mindset when dealing with these types of tokens. Dogecoin had a market cap of over $80 billion at its peak, making it more valuable than many established, traditional companies – making it a significant economic force. But it doesn’t depend on any underlying asset, unlike the way Apple’s stock has value because it sells products that people use all day.
Henry:
So we must remember that this inherent volatility of memecoins can cause investors to lose a significant portion of their investment. That said, there is potential for these tokens to integrate into the DeFi ecosystem. Some memecoins have already started this transition. For example, Shiba Inu (SHIB), another dog-themed memecoin, launched ShibaSwap, its own decentralized exchange, which offers additional utility and value to its holders.
Question: Do you think this memecoin trend can continue?
Henry:
It’s hard to say. Memecoins first exploded into mainstream consciousness during the 2021 “Wall Street Bets” movement, a Reddit-fueled community movement. So in terms of the history of modern financial markets, we are early in this trend. But as with any fad in the fast-paced world of cryptocurrencies, the future of memecoins is uncertain.
Jeff:
I think they can continue to grow in popularity and influence. So far, memecoins seem to be an important part of the crypto landscape. Fads come and go, and everything speeds up in the digital age, so let’s see. In the meantime, at least it’s entertaining.
Q: Do you have any advice for anyone looking to invest in memecoins?
Henry:
Be careful out there. Recognize the risk of pump-and-dump schemes. That is where the price of a memecoin is artificially inflated, often by coordinated groups or influential individuals (whales), only to be sold once the price is high. That leads to a sharp fall in value and significant losses for those who bought in during the price increase.
Jeff:
Emotional regulation is incredibly crucial to success in crypto trading. Understand the psychological forces of FUD and FOMO and don’t let them guide your decisions. There are technologies such as algorithmic trading systems and robo advisors which could help avoid impulsive actions driven by FUD and FOMO. Again I point out that FUD & FOMO report we had recently out – it is recommended to read.
Henry:
It is. We outline some important trading practices to adopt: always remember that you are trading at your own risk. Have a long-term perspective. Develop a well-researched trading plan. Research risk management techniques and set realistic goals. And one of the bigger ones, learn to tell the difference between fact-based information and social media hype. Remember, if you’re not a pro, don’t bet more than you’re willing to lose. But with memecoins, even the pros can be caught off guard.
Disclaimer: BTSE is an investor in CryptoSlate.