Meme Coins Show the Fun Side of Crypto, but Utility Will Drive Disruption

For the past few years, the crypto industry has been trying to establish itself as a genuine asset class for investors

Cryptocurrency prices have soared over the past year, and that includes a surge in meme coins, which are digital currencies that are often created as a joke or parody.

Over the past week, Dogecoin (CRYPTO:DOGE) has soared 85% and now has a market cap of $53.3 billion. But it's not the only meme coin that's seen huge gains.

As of Saturday at 9:00 a.m. ET, Pepe (CRYPTO:PEPE) is up 106.8% over the past week and has a market cap of $9.3 billion, dogwifhat (CRYPTO:WIF) is up 62% and has a market cap of $3.8 billion, and Shiba Inu (CRYPTO:SHIB) rose 28.9% to reach a market cap of $14.7 billion.

Meme coins are a big part of the cryptocurrency industry, and they indicate the fun and rebellious nature of crypto. They've also played a role in the industry's recovery over the past year.

Vibes can drive the meme trade, as indicated by so many tokens being named after dogs in one form or another. And with speculation running rampant in all kinds of high-risk assets over the past month, it's no surprise that the meme tokens have benefited greatly.

But what memes don't bring is disruption to the financial system. You can't pay with Pepe tokens for a cup of coffee or buy a hat with dogwifhat.

That utility is primarily taking place with stablecoins, which have the advantage of being on the blockchain and the stability of being backed by U.S. dollars.

This is a natural tension in the trading today because it's clear stablecoins are what will help the blockchain be a truly disruptive technology. According to Visa, 426 million stablecoin transactions have occurred in the last 30 days, with $2.3 trillion in value.

Those are big numbers and will continue to grow as payment companies like Stripe invest more in making blockchain rails a reality.

As positive as this week was for meme coins, the momentum may already be fading. The election bounce in the S&P 500, which was magnified in crypto, has already started to fade.

What will be more critical are the appointments and policy changes that affect the crypto industry in the long term. I don't doubt there are big changes ahead, but that may not help meme coin values. Utility is likely to be a focus of policy changes and that utility may not extend to meme coins.

When speculation runs rampant, meme coins tend to benefit along with high-growth stocks, but the speculative phase doesn't last forever, and if there's no fundamental value underneath the trade will fade.

I think the better way to play the growth in crypto is companies like Coinbase and Robinhood, who can make money off trading but will benefit from the long-term utility being built. They have durable value, unlike meme coins.