Memecoins: The rise of the joke cryptocurrencies that are luring young Singaporean investors

Memecoins are cryptocurrencies that often begin with a joke or a viral meme. Like many other cryptocurrencies, memecoins have no obvious use and are not backed by real assets, so they are simply valued based on what people are willing to pay for them.

A Singaporean investor, who declined to be named, told The Straits Times that he started investing in Bitcoin in 2021 after hearing about it from his friends.

But two months later, he decided to pull out his money from Bitcoin and park it in memecoins instead, as the latter offered a much lower barrier to entry, with many costing less than US$1 (S$1.37) a coin.

If he gets lucky, his memecoins will give him outsized returns when they soar in value. “I have very little to lose and a lot to gain,” he told The Straits Times.

Rising popularity of memecoins among Singaporean investors

Memecoins are cryptocurrencies that often begin with a joke or a viral meme. Like many other cryptocurrencies, memecoins have no obvious use and are not backed by real assets, so they are simply valued based on what people are willing to pay for them.

The original memecoin – Dogecoin – emerged in 2013, but it was only after endorsements by tech billionaire Elon Musk in 2021 that it became mainstream.

Memecoins re-entered the spotlight in 2023, with several new dog-themed coins, such as Floki Inu and Tamadoge, reaping in billions of dollars, at least on paper.

TikTok trend of cryptocurrency in Singapore

ST has yet to come across any published studies that look at the popularity of memecoins among Singaporean investors specifically.

However, a 2024 survey by Independent Reserve – a cryptocurrency exchange and custodian – found that 44 per cent of Gen Z investors in Singapore own memecoins.

Conversely, older investors have a smaller appetite for this asset class, with only 12 per cent of Baby Boomers reporting that they own memecoins.

In terms of awareness, Gen Zs topped the charts, with 80 per cent of them being aware of memecoins.

As for memecoins, young millennials aged 26 to 35 and Gen Zs were the most clued in, with 70 per cent and 75 per cent being aware of them respectively.

Mr Ahmed said: “Memecoins have brought a lot of buzz to the cryptocurrency space in recent years.”

“While some see it as just hype, it has undeniably brought a massive wave of new users into the space.”

For Dr Don Lee, a senior lecturer in finance at the National University of Singapore (NUS) Business School, the rise of memecoins is a “fascinating phenomenon”.

He said: “Memecoins give people a system to transfer money and something to laugh about – why wouldn’t you put money in it?”

Growing frustration at the rising costs of living, and the banality of working a nine-to-five job, has also drawn many to the get-rich-quick potential of memecoins, said Mr Ahmed.

“To put it simply – no risk, no ‘Rarri (Ferarri)’,” said Mr Tan, poking fun at a slogan used by cryptocurrency influencers on social media.

Akin to gambling or buying a lottery ticket, memecoins are attractive as their possible returns are asymmetric, said Dr Lee.

“You put in a little, but the potential gain is rapid and outsized,” he said.

The pervasiveness of cryptocurrency success stories online has also contributed to its appeal.

“I see a lot of people around the same age as me – very young, getting into memecoins,” said Dr Lee.

But Dr Lee warns that online narratives on cryptocurrency may be biased, as those who lose money may not be inclined to divulge their losses.

He added that memecoins are largely unregulated, which makes it easy for them to be manipulated.

Dr Lee said: “Memecoins are very much a Wild Wild West, so things that are illegal in equity, like insider trading – or trading before news is released – may occur.”

Pump and dump – a phenomenon where investors coordinate the buying of a coin to “pump” up its prices, and later “dump” their shares at inflated prices – may also happen.

For regulated assets such as stocks, pump and dump schemes are illegal.

“This is to protect all the investors, as markets should not just be a playground for a group of people to manipulate prices to benefit themselves,” said Dr Lee.

Investors also have to be prepared for wild swings in their portfolio values.

Mr Tan said he invested about 70 per cent of his savings into memecoins in 2023.

At the time of this interview, his portfolio was valued at around 200 per cent of his initial investment.

“In 2023, I was able to quit my job and travel the world,” he said.

Dr Lee said that investors may still consider memecoins, but should proceed with caution.

“It’s a high-risk, high-return asset