Comparison of NFT and Memecoin Development in Past Bull Market and Current Bull Market

Original Title: “NFTs and Memecoins in Last vs Current Bull Markets”

Written by: Neptune Mutual

Translated by: Baihua Blockchain

In recent years, memecoins and NFTs have become prominent assets in the crypto world.

Memecoins are cryptocurrencies inspired by internet memes, which have gained significant attention and amassed millions of followers. Community support and social media buzz have driven their prices to remarkable heights. On the other hand, NFTs are blockchain-based digital assets that represent ownership of unique items such as artwork, music, or collectibles. Unlike memecoins, NFTs typically have some utility within their ecosystems.

Bull markets are known for their price increases and play a crucial role in asset growth. During bull markets, investors are more willing to take risks and try novel assets, leading to a surge in the popularity and value of memecoins and NFTs. This environment fosters innovation and brings a broader audience to these digital assets, highlighting their potential and risks.

In this article, we will explore the dynamics of memecoins and NFTs in previous and current bull markets.

1. Memecoins in Previous Bull Markets

During the previous bull market from 2020 to 2021, the institutional adoption of Web3 became a well-known fact. Bitcoin broke previous highs, reaching $64,000. This surge marked a shift in user perception, triggering speculative behavior and leading many institutions and organizations to adopt cryptocurrencies.

At this stage, memecoins like Dogecoin and Shiba Inu became significant players in the cryptocurrency space. The prices of these memecoins skyrocketed to unusual heights, driven by social media frenzy and retail investors' fear of missing out (FOMO).

Dogecoin was initially created as a joke in 2013 but gained serious attention in 2021. In fact, Dogecoin's price increased by 3,300%, making it the tenth-largest cryptocurrency by market capitalization. In May 2021, it reached an all-time high of $0.731, largely due to endorsements from celebrities like Elon Musk and Mark Cuban.

Shiba Inu, often referred to as the "Dogecoin killer," followed closely behind Dogecoin's popularity and the growing meme culture. Platforms like Reddit, Twitter, and TikTok played a key role in spreading memes, generating viral interest, and driving up prices.

Many investors viewed these coins as lottery tickets, hoping to profit from short-term gains rather than making long-term investments. The influence of media coverage was significant, amplifying price volatility through sensational headlines and viral tweets.

2. Memecoins in the Current Bull Market

Today's bull market began around April 2024, with new memecoins like PEPE gaining popularity, joining the ranks of previously meme-inspired cryptocurrencies. PEPE, based on the "Pepe the Frog" meme, quickly attracted attention due to its amusing concept and active community.

Market dynamics have shifted, and investors have become more cautious. They no longer blindly chase any memecoin but focus on the potential utility of the coins, the strength of the community, and the financial models. This has made the memecoin market more stable compared to previous periods.

Investor sentiment also seems to have changed. People are not only interested in quick profits but also in the long-term prospects of these coins and community activities. The memecoin community has become stronger and more proactive in promoting their coins, sometimes even creating real-world projects and events.

Despite investors being more vigilant and cautious, they still fall victim to multiple memecoin attacks. For example, the CONDOM operation against NORMIE involved hacking and rug pulls.

3. NFTs in Previous Bull Markets

In the last bull market, the popularity of NFTs (non-fungible tokens) soared, becoming a major trend in the crypto world. Although NFTs began to be publicly issued after the recognition and adoption of the EIP-721 standard in 2017, that year was one of experimentation and development. The launch of Cryptopunks and CryptoKitties was particularly notable during that period, helping to shape the NFT ecosystem.

The exponential growth of NFTs occurred during the bull market from 2020 to 2021. Key trends during this phase included the rise of digital art and collectibles. Platforms like CryptoPunks and Bored Ape Yacht Club became extremely popular, offering users digital avatars they could own and trade. These NFTs often served as status symbols and collectibles within digital communities.

The market grew rapidly, fueled by the novelty of owning digital assets and the convenience of trading on blockchain platforms. Media coverage and celebrity endorsements drove public interest, bringing NFTs into the mainstream and encouraging more people to explore this new form of digital ownership.

High-profile sales made headlines, with some NFTs selling for millions of dollars. Beeple's digital artwork "Everydays: The First 5000 Days" sold for a record-breaking $69.3 million in March 2021. In 2021 alone, approximately $41 billion worth of cryptocurrency was spent in the NFT market, showcasing its rapid rise and immense market interest.

In terms of attacks, Stazie lost about $1 million in August 2021 due to a phishing scam. Iconics, Evolved Apes, Bored Bunny, and Frosties were some of the manipulated fraudulent projects post-bull market.

4. NFTs in the Current Bull Market

After the last bull market, the NFT market experienced a sharp decline, leading to the NFT crash of 2022. Many NFTs, including popular works, performed poorly and reached their lowest prices.

While some new interest emerged around 2023, the NFT market may only partially recover in the bull market of 2024. However, it is unlikely that we will see the same hype and chart explosions as in 2021.

An important development in the current bull market is the evolution of NFTs, accompanied by new trends, expanding into gaming, the metaverse, and sports. This allows players to own and trade unique items in virtual worlds and games. Similarly, traditional brands entering the NFT space may provide a boost. For example, Starbucks launched its first paid NFT collection in March 2023, selling 2,000 digital stamps at $100 each in just 20 minutes.

Pudgy Penguins is a typical example of an NFT project currently making waves. Although it was launched in August 2021, it gained the most attention in the first few months of 2024. These PFT-themed artworks surged due to their appealing art style and strong community.

In summary, investor attitudes are maturing, placing greater emphasis on the practical benefits of NFTs rather than speculative trading. Additionally, there are now many more affordable NFT projects with practical uses, rather than just a few high-value collectibles as seen in 2021.

The industry still faces challenges, such as rug pulls, phishing attacks, smart contract vulnerabilities, and DeFi wallet issues, which may affect user confidence. For instance, a phishing attack targeting OpenSea in September 2023 revealed security issues that need attention.

Similarly, MetaDragon is a recent case of a hacking incident caused by a smart contract vulnerability.

5. Comparative Analysis

Comparing the previous and current bull markets, meme coins and NFTs exhibit some similarities and differences.

In both periods, meme coins like Dogecoin and PEPE heavily rely on social media hype and community support to drive interest and prices. However, current investors are more cautious, assessing long-term value and community engagement rather than merely chasing hype.

The trends for NFTs have also shifted. The fervor for high-priced sales and widespread enthusiasm for NFTs as collectibles has cooled. Today, NFTs focus more on practicality in gaming, the metaverse, and integration with traditional brands, leading to a more balanced growth pattern and more practical projects.

In terms of security, both markets have experienced hacking incidents and fraudulent activities, resulting in millions of dollars in losses. In both bull markets, fraud, phishing, and smart contract vulnerabilities have been exploited to affect digital assets. Addressing these challenges is crucial for maintaining investor confidence in these assets.

Legitimate meme coin and NFT projects are continuously strengthening their defenses, conducting smart contract audits and vulnerability fixes. As a user, you need to remain vigilant and check for potential vulnerabilities in projects. Reviewing a project's community and user sentiment may be helpful.

Additionally, using multi-signature wallets (which require multiple approvals for transactions), advanced consensus mechanisms, and hardware security modules is essential for building a more secure infrastructure.

For digital asset owners, another effective way to protect their assets is to consider DeFi insurance. It provides financial protection against losses due to hacking, exploitation of vulnerabilities, or other unforeseen security breaches.