Reddit has become a new trend for cryptocurrency trading, how to understand word-of-mouth marketing?

Original Title: Retail is buying coins, time to look at Reddit data
Author: 0xBaba23, Crypto Kol
Compiled by: zhouzhou, BlockBeats

Editor's Note: Retail attention on PEvPE is increasing, especially after the listing on Robinhood, where PEPE's Subreddit membership has surged. This article will analyze the psychology of retail investors who prefer low-priced tokens and rely on word-of-mouth. Overall, PEPE is dominating this round of meme coins, and its growth is expected to accelerate further with the recovery of the Ethereum ecosystem.

The following is the original content (reorganized for readability):

As retail investors return and start buying coins, we need to consider some previously less relevant factors. Retail investors are unfamiliar with TVL and have never opened a Dune dashboard, so will they buy a coin based on analyses that have become common knowledge in the crypto community (CT)?

The answer is no; they will not choose coins based on the in-depth analyses familiar to crypto Twitter users. Instead, their focus is on ensuring their investment portfolio and chasing that legendary 1000x return.

Here are the main factors to consider when understanding retail thinking and purchasing behavior:

1. Financial Nihilism: The cost of living is becoming increasingly unbearable for ordinary people, and upward mobility opportunities are out of reach for more and more individuals. Therefore, many are driven by the potential motivation to improve their economic situation.

2. High Risk, High Reward Perception: They view cryptocurrency as a pathway to "get rich quick."

3. Word-of-Mouth Guidance: Stories of turning $100 into $1 million can spark a frenzy and attract attention.

4. Lack of Knowledge: Retail investors rely on those considered experts—such as anonymous users on Reddit posing as gurus or influencers on YouTube.

5. Low Capital Investment: An investment of $100 is a loss most people are willing to bear, as it represents the potential for generational wealth.

6. Easy Access: Applications like Robinhood allow people to start trading easily with just a smartphone or computer.

Considering these dynamics, I have been monitoring indicators of retail interest. YouTube and Reddit are popular places for new investors seeking "alpha." One metric worth tracking is Subreddit membership growth, as Reddit is more retail-oriented than Twitter.

After analyzing many Subreddits, PEPE and BONK show significant membership growth.

PEPE:

BONK:

In contrast, WIF and SHIB have seen slower growth:

WIF:

SHIB:

Key Observations from Reddit Data:

1. The Importance of Robinhood Listing: The listing of Robinhood can attract retail attention and liquidity.

2. Unit Bias Still Exists: Retail investors tend to buy tokens with lower prices.

3. PEPE Leads the Trend: PEPE has recently garnered the most retail attention.

PEPE's Subreddit experienced explosive growth after its listing on November 13, surpassing the growth of all other meme coin Subreddits. This indicates that Robinhood remains the primary liquidity access platform for retail investors. Although WIF also gained a listing on Robinhood on November 25, its membership growth lagged behind PEPE and was even slower than BONK.

Retail investors' obsession with unit bias is particularly evident in Subreddit and YouTube comments. Investors often boast about holding "100 million PEPE" rather than focusing on the dollar value of their holdings. This mindset stems from a lack of understanding of market cap and FDV (fully diluted valuation)—many believe that lower-priced tokens have greater upside potential.

PEPE's Subreddit is now the most active among this round of meme coins, as evidenced by its continuously growing membership. This growth is fueled by the popularity of the topic "PEPE to $1" in the Subreddit—implying a 46,000x return. Although this goal is clearly unattainable, this "moonshot" narrative is similar to the stories that once propelled DOGE and SHIB to soar.

Retail investors rely on word-of-mouth, creating a feedback loop: as prices rise, profit stories spread, attracting more participants. For example, one retail investor tells a friend they made 3x on PEPE but is still holding because "it's still early." The higher the price, the faster this news spreads.

If these trends on Reddit continue, Subreddit data will become "alpha," effectively indicating retail interest in coins. Currently, PEPE is clearly the winner in this group, and the recovery of the Ethereum ecosystem (along with rising prices) will further accelerate this growth.