The Truth About Meme Coins: When Emotions Become Assets, Who Pays for the Bubble

During this National Day holiday, I observed an interesting phenomenon: while the A-shares market was closed, the encryption world was staging a dramatic finale on financial logic.

In a leading exchange ecosystem, a batch of oddly named Meme coins saw their market value increase dozens of times within a few days. Meme4, PALU, and other creatively named tokens have allowed many early participants to easily achieve profits of over one million dollars. The Chinese-speaking community went crazy, various KOLs were cheering, and Twitter was bustling with activity.

But the carnival did not last for a few days. Starting in October, free fall began. A daily drop of 95% is not unusual, with over 100,000 traders being liquidated, totaling $621 million. The myth of overnight wealth instantly turned into a bloody account.

I have seen this scene in Wall Street and Lujiazui.

If this happens on Nasdaq

Do you remember the GameStop incident in 2021? Retail investors on Reddit united to drive the stock price of a nearly bankrupt video game retailer up by thousands of times, leaving short-sellers with nothing left. The U.S. SEC called it a “milestone in behavioral finance.” The key is — as long as the transactions are real and the information is fully disclosed, it is considered “part of the market.”

The logic in the United States is very clear: let bubbles happen, because bubbles catalyze market evolution.

What would happen if the Meme coin craze occurred on Nasdaq? It is estimated that new financial products would emerge—such as “Meme Stock ETF,” quantifying social heat into investment factors. Financial media on Wall Street would extensively discuss the “victory of retail capitalism.” The SEC would initiate research on “social media market manipulation” and ultimately conclude: this is not fraud, but a collective financial reaction formed by group sentiment through algorithmic matching and social dissemination.

Different Local Logics

If a token like “Binance Life” were to appear on the Shanghai Stock Exchange, the story would be completely different. Regulators would immediately signal risks, the media would call for rationality, and the entire event would be defined as a “speculative market fluctuation,” becoming a live teaching material for investor education. The logic of the market in China is “seeking progress while maintaining stability” - excitement is allowed, provided there is order; innovation is welcomed, but risks must be borne by oneself.

Meme Coin Lives in Another World

But the encryption market is different. It is neither bound by the SEC nor under the jurisdiction of the SEC. In plain terms, this is a no man's land - a gray financial testing ground self-organized by code, liquidity, and narrative.

The most wonderful thing is that the American-style social speculation mechanism (information diffusion + collective momentum) and the Chinese-style public wealth psychology (grassroots resonance + community participation) are perfectly integrated here.

Exchanges are no longer neutral platforms; they have become “narrative makers.” KOLs are no longer bystanders; they have turned into “price amplifiers.” Retail investors are indulging in self-celebration within the cycle of algorithms and consensus, while also consuming themselves.

What is the most fundamental change? Prices are no longer determined by cash flow, but by the speed of narratives and the density of consensus.

We are witnessing the birth of “emotional capital”—a new form of capital that lacks financial statements and only has cultural symbols; it has no company fundamentals and only consensus curves; it does not pursue rational returns but only seeks emotional release.

The data speaks the brutal truth

In the first nine months of 2025, 90% of the top Meme coins' market value collapsed. In Q2, 65% of new tokens lost over 90% of their value within six months. It’s like the gold rush of the digital age – most prospectors end up losing their investments, while only those selling shovels make a profit.

The question arises: When currencies begin to tell stories, the underlying logic of global finance is being completely rewritten.

In traditional markets, prices reflect value. In the encryption market, prices create value.

This is both the ultimate manifestation of decentralization and possibly the limits of de-responsibilization. When narrative replaces cash flow, and emotion becomes an asset, every participant is a guinea pig in this experiment.

The Real Way Out

The Web3 industry stands at a crossroads: continue to indulge in the short-term frenzy of “emotional capitalism” or move towards the long-term construction of a “value-driven ecosystem”?

The answer lies in: strengthening community governance, introducing a more transparent regulatory framework, and establishing an investor education mechanism. Only in this way can decentralized technology truly empower global financial fairness, rather than becoming a tool for harvesting investors.

The next time you see a certain KOL wildly recommending “hundred times coin”, ask yourself a question: Am I participating in financial innovation, or am I paying for someone else's financial freedom?

When currency starts telling a story, what you need most is not FOMO, but the ability to think calmly.