Bloomberg reports that hedge funds have started to be tempted by the crypto memecoins, in their quest for bigger profits.
Newport Beach, California-based fund Stratos – backed by heavyweight investors Marc Andreessen and Chris Dixon – reportedly recorded 137% gains in Q1 by allocating part of its portfolio to dogwifhat (WIFThe biggest memecoin is Solana, which has now become the largest coin on Solana.SOL).
Says Stratos’ founding partner Rennick Pallet,
“The unspoken truth is that if the fund isn’t doing it, the people working at the fund are doing it.”
While memecoins essentially started as a joke – perhaps with the launch of Dogecoin (DOGE) in 2013 –the investor says that more hedge funds will inevitably start taking the sector more seriously as they become more comfortable with digital assets in general.
“People will become more comfortable with the concept over time, not dissimilar to how people became comfortable with crypto overall… I wouldn’t be surprised with firms creating meme-only funds, just as they created NFT-only funds.”
Cosmo Jiang, a portfolio manager at crypto hedge fund Pantera Capital, describes memecoins as “culture coins” This is a form of membership in a movement or group that’s not official.
“Meme coins initially started as clearly a joke. But over time they’ve evolved as much more than that. People have started to call some memecoins as culture coins, they are a membership into a culture or a group of people with a shared belief system.”
Josh de Vos (research lead at CCData) notes that infrastructure and liquidity are evolving rapidly in the memcoin space, allowing companies from traditional finance who care more about low liquidity, to participate.
“Since the last cycle, the infrastructure surrounding memecoins has become more robust, with significant improvements in liquidity for several tokens… Centralized exchanges have developed sophisticated futures markets for leading memecoins, enabling hedge funds to capitalize on their volatile movements and effectively hedge their exposure.”
Shiba () is the biggest memecoin at this time, with a market capitalization of $22 billion.SHIBAt $15 billion, WIF At $3.2 billion.
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