What does the Memecoin bubble burst mean for cryptocurrencies?

Author: Zack Guzman Translation: Vernacular Blockchain

As the dust settles on the latest memecoin storm, the crypto industry is once again at a familiar crossroads. This time, the trigger for the storm is a scandal involving Argentine President Javier Milei and the ill-fated Libra Token - an incident that has sparked widespread discussion about front-running, insider trading, and the growing absurdity of the memecoin market.

To delve deeper into the impact of this storm on the entire industry, Coinage interviewed Travis Kling, founder of Ikigai Asset Management - who has been warning about the growing nihilism in the crypto market for more than a year. In his view, this incident is the result of an increasingly unbridled cycle that has reached its extreme.

“I think we are now experiencing a post-Gensler SEC ‘no regulation’ or ‘light regulation’ environment at high speed…People have started calling it ‘crime season’, which has been popular since Trump launched his memecoin,” Kling said. He believes that the involvement of political figures such as Donald Trump and Javier Milei in memecoin has made the absurdity of the market impossible to ignore.

“It seems that Iggy Azalea crawled forward so that Donald J. Trump could stride forward,” he quipped, highlighting the unexpected group of players who are now making a fortune in the crypto market.

Kling believes that the memecoin ecosystem has completely degenerated into a realm of "the most nihilistic, the most extreme gambling, the most worthless, the most meaningless, the most predatory, the most incredibly predatory - all bad, no good". The question is whether this is just a cyclical over-enthusiasm in the market that will eventually fade, or is there a deeper corruption in the crypto industry on core use cases? "We still have a use case problem, a core utility problem. And now, this thing is filling that gap."

This nihilistic atmosphere is exacerbated by the behavior of market participants. Hayden Davis, a controversial figure who has repeatedly traded well-known memecoin projects, said bluntly in a recent interview with Coffeezilla: "This is an insider's game. This is an unregulated casino." Although he was aware of the risks, he himself made millions of dollars from it, while later retail investors were completely harvested. Kling is exhausted by it all: “It’s just overwhelming… It’s just crazy, you know?”

The speed of these scams is accelerating. Token projects that used to take years to cash out are now a thing of the past. Now, as Kling said, “We have refined the scam to the extreme—the president of Argentina pulled off a scam in the crypto market in just five hours.” Compared with the longer, slower token sales of the past, this situation seems particularly absurd, but when you think about it, it seems to be the same. “Before, we at least pretended to do some projects. Now it’s completely naked nihilism, and people are still lining up and can’t wait to participate in this scam.”

Although memecoin has recently driven a surge in on-chain transaction volume, especially in the Solana ecosystem, Kling warned that this may not be the positive signal that investors are looking for. He pointed out that the mainstream view of institutions at present is "owning a casino", but Solana's explosive growth driven by memecoin is facing sustainability issues, and this bet may not be as safe as some people think. Pantera's portfolio manager Cosmo Jiang said in an interview with Coinage in December last year that Solana has surpassed Ethereum in discussions among institutional investors. In addition, the developers of the Solana ecosystem at the time also emphasized that Solana is far more than memecoin.

“Memecoins are social, they obviously impact the whole social aspect, the more attention they get on social networks, the bigger they’ll be,” Mert said. “I don’t think it’s strange that they attract the most attention. But what I want to say is that the statement that ‘Solana only has memecoins’ is completely wrong. The fact is that Solana provides the best token issuance experience, whether it’s issuance, transfer, trading, or storage in a wallet, all built on a truly usable, scalable infrastructure that can support a large number of users.”

However, putting aside the short-term impact caused by Memecoin, a bigger question remains: If topics like this dominate the industry’s headlines, what does the crypto market represent? Kling believes that "the memecoin phenomenon is inseparable from the core practicality problem of the entire altcoin track. If there were a large number of altcoin projects that could say, 'Look at this, it has achieved real application in the real world,' we would be having a completely different discussion today. But unfortunately, there are very few such projects."

Despite his frustration with the current state of the market, Kling has not given up. He admits that the industry is in an existential crisis, but he also sees hope. "The current crypto market is extremely frustrating, but at the same time, we have unprecedented support from the highest levels of the US government. This contrast is incredible." The recent Trump administration's friendly attitude on crypto policy, including the appointment of David Sacks and the priority of promoting regulatory clarity, suggests that the long-term development trajectory of the crypto industry may not be as pessimistic as it seems.

"This is a battle worth fighting," said Kling. As for whether the entire industry will take this opportunity to adjust itself and turn to real practical applications, it remains to be seen. But one thing is clear: The era of unbridled scams may be coming to an end.