Memecoins, Are They Really Profitable Investments…Hidden Risks

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While memecoins are attracting investors with high returns, warnings have emerged that they are in fact high-risk assets carrying extreme volatility and structural risks simultaneously.

According to cryptocurrency specialized media Watcher.Guru on May 2 (local time), memecoins are assets originating from internet culture that have the potential for short-term surges, but also possess a 'high-risk, high-return' structure with an equally high risk of sharp declines. The media reported that a characteristic of these assets is an extreme amplification of price drops, especially if market conditions turn bearish.

As a prime example, Dogecoin (DOGE) recorded an all-time high of $0.7316 in May 2021 and has since fallen by over 85%. Shiba Inu (SHIB) also showed a similar trend, plummeting by over 92% from its peak of $0.00008616. The media pointed out that this pattern is repeating in most memecoins.

The problem lies in the lack of practical utility. Memecoins are often based on community and online culture rather than technical functions or ecosystems. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) classified memecoins as 'digital collectibles' in a joint statement, and further explained in a February 2025 announcement that these assets might not qualify as securities.

Investment risks do not end there. Memecoins are frequently exposed to fraud cases like rug pulls. This involves developers attracting investment funds, then abandoning the project and absconding with the money, a recurring issue that causes repeated harm to investors.

The media emphasized that while memecoins can offer high returns in a bull market, investment decisions must be based on thorough prior research and risk awareness. It warned that approaching them solely with expectations of price increases could lead to significant losses.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*