Analysis of Investment Strategies for Memecoins

Memecoins, as a special category in the cryptocurrency market, have attracted considerable attention from investors. This article will analyze the investment logic and strategies of memecoins from multiple perspectives.

Beta Strategy

Some memecoins have a high beta value against Layer 1 assets, which can provide a leveraged effect without using leverage. Taking BONK as an example, when its 30-day beta exceeds the 90-day rolling beta, a significant rise often occurs.

The price trend of BONK is closely related to SOL, but during periods of strong performance, this correlation may weaken. Overall, BONK can be seen as a high-risk/high-reward bet on SOL.

On-chain Data Analysis

On-chain data can reflect the underlying quality and beliefs of holders. We compared the following metrics of several major memecoins:

• Token holder 90-day growth rate
• Median and Average Holdings
• The ratio of holding over $1000 and $100k
• Large Holder Retention Rate
• Large Holder DEX Net Inflow/Outflow

These indicators help assess the holder structure of memecoins and investor confidence.

Other Considerations

In addition to on-chain data, we also focus on:

• Trading Liquidity
• Experienced multiple significant pullbacks
• Open Interest

Community and Faith

High-quality memecoin projects usually have:

• Resonant narratives and slogans
• Strong sense of community belonging
• Effective leadership and coordination
• High cultural integration
• Outstanding marketing ability

Valuation Method

The "fair value" of a memecoin can be assessed in the following ways:

• MVRV Ratio: When it is below 1, it may be a buying opportunity.
• RSI Indicator: Close to 30 is oversold, close to 70 is overbought
• Moving Average: Consider buying when the price breaks through key support levels.
• Google Search Trends: Reflecting Public Interest

Macroeconomic Environment

Memecoins are highly dependent on the liquidity environment and need to be assessed in conjunction with the overall market risk appetite.

Conclusion

This article provides a framework for investing in memecoins, covering various aspects such as target selection, valuation, and timing of buying and selling. Nevertheless, investing in memecoins still carries high risks, and investors need to exercise caution.