Initially, memecoins were just internet jokes. Now, some of them have turned ordinary people into millionaires, and at the same time, some have wiped out others.
Memecoins represent a very controversial area of the cryptocurrency world: they are extremely fun while rising, really harsh when falling, and completely impossible to ignore when one of them becomes viral.
If you wonder how to invest in memecoins but don’t know where to start, then this article will help you. We’ll explain what memecoins are, how memecoin trading works, how to read the market without getting fooled, and how to take your first steps, no matter if you are an experienced crypto investor or someone exploring cryptocurrency for beginners.
Contents
What Is a Memecoin?
A meme cryptocurrency is a token linked to a specific aspect of internet culture: character, joke, or viral trends. That’s where most of the memecoin’s value comes from. Most memecoins do not have a specific use case or outstanding technology behind them.
Dogecoin was the first memecoin, launched back in 2013 and featuring the Shiba Inu meme. It started as a joke, a parody of Bitcoin. Fast forward several years, and it turned into the 9th biggest cryptocurrency in terms of market cap.
This remarkable accomplishment of Dogecoin attracted hundreds, and then thousands, of copycats. Shiba Inu, Pepe, Floki, Bonk, Brett, and many other memecoins followed in the footsteps of the original dog token through strong community engagement, social media hype, and speculative market activity. Some have survived the test of time. Most have not.
The main difference between memecoins and “serious” crypto projects like Ethereum or Solana is the lack of strong technical innovation. There is no revolutionary consensus protocol, no decentralized application (dApp) ecosystem, and no institutional support, although some tokens might acquire these over time. What memecoins have is community, story, and momentum. In the crypto markets, these alone can cause price movements of several thousand percentage points.
Why Do People Invest in Memecoins?
Before looking at the memecoin guide itself, let’s discuss why these assets attract so much attention, as well as huge amounts of capital.
The potential gains can be substantial. The price of Dogecoin surged over 12,000% in 2021. Shiba Inu at its peak performed even better. Pepe ballooned by thousands of percent within weeks in 2023. Stories of the first investors turning a few hundred dollars into massive fortunes still bring people to invest in memecoins.
It’s very easy to start investing in memecoins. Unlike investing in real estate or other businesses, buying a memecoin only requires a smartphone, a wallet, and a little cash. This simplicity appeals to rookie investors.
Many people genuinely enjoy being part of the memecoin culture, due to the fact that meme communities are lively, creative, and centered on shared humor and identity. For some participants, this social aspect is just as strong a motivation as expected profits.
The Risks You Cannot Ignore
An honest memecoin guide is upfront about risk. Trading memecoins is almost like gambling as they are highly volatile.
Rug pulls are so widespread they’ve become a regular feature of the scene. A group develops a token, creates excitement on social media, lures buyers, then ceases to supply the token, sells the holdings, and disappears, taking the liquidity with them. By the time most investors become aware of what has happened, the token’s price would have already plummeted.
Pump-and-dumps remain a common phenomenon for small, newly launched tokens. Groups coordinate to purchase large quantities to push up the price, creating a frenzy on social media. When the masses get on the bandwagon, the group sells off their holdings for a profit.
Most memecoins eventually lose all their value. The tokens that make headlines are a perfect example of survivorship bias. For every Dogecoin or Shiba Inu, there are tens of thousands of memecoins that launched, briefly attracted capital, and then faded into oblivion.
Sometimes liquidity can disappear without a trace. Even the most vibrant memecoins with highly engaged communities can see their trading volume drop to near-zero during a market correction, leaving holders without a way to sell the tokens at a reasonable price.
Rather than discourage you from memecoin investment, we mean to equip you with what you absolutely need to know to approach this task with open eyes.
How to Invest in Memecoins: Step-by-Step
Step 1: Get Your Foundation Right
To buy memecoins, you first need to set up:
- A crypto exchange account: Change your dollars, euros, etc., into crypto major cryptocurrencies on platforms like Coinbase, Kraken, or Binance. You need this step because most memecoins aren’t directly purchasable with fiat.
- A self-custody crypto wallet: The most widely used wallets are MetaMask (for Ethereum-based tokens), Phantom (for Solana-based tokens), and Trust Wallet (multi-chain).
Make sure to get through your exchange’s KYC (Know Your Customer) process before you actually need it. The KYC process can take a while and is mandated by law on regulated platforms.
Step 2: Buy a Base Currency
To buy memecoins, you need a major cryptocurrency, most likely:
- ETH▼$1,663.84 (Ethereum) for tokens on the Ethereum network or Layer 2s
- SOL▼$65.53 (Solana) for tokens on the Solana network, which has become the dominant hub for new memecoins in recent years due to its speed and low fees
Buy your base currency on the exchange, then transfer it to your self-custody wallet.
Double-check the network before you send any crypto. Sending ETH to a Solana address or vice versa can result in permanent loss of funds.
Step 3: Choose a Decentralized Exchange (DEX)
Many newer memecoins are not listed on major exchanges. To access them, you’ll have to use a decentralized exchange: a platform that connects buyers and sellers directly through smart contracts, without a company in the middle.
Popular DEXs by network:
- Uniswap: Ethereum and Layer 2s
- Raydium/Jupiter: Solana
- PancakeSwap: BNB▼$596.11 Chain
Connect your wallet to the DEX you want to use, look up the token you want to buy by its contract address (not just the name, we’ll get back to this in a second), and do your swap.
Step 4: Find and Verify the Contract Address
This is where a lot of people get tricked. For every legitimate memecoin, there are dozens of counterfeit tokens using the same name.
To avoid getting scammed, always get the contract address from the project’s verified social media profile, official website, or a trusted aggregator like CoinGecko or CoinMarketCap, never from a random post on a Telegram group or Discord channel.
Before you buy, paste the contract address into a tool like DEXScreener or Dextools. That’s how you can see the token’s liquidity, trading volume, holder distribution, and whether the liquidity is locked, all useful indicators of legitimacy.
Step 5: Set Your Slippage and Execute the Trade
On a DEX, “slippage” is the difference between the price you expect and the price you actually get, due to price movement during the transaction.
For high-volatility memecoins, you’ll often need to set slippage tolerance to 3-10% for the transaction to go through. Setting it too low means the trade fails; setting it too high means you may pay significantly more than intended.
Once you have checked the transaction details, approve it. The token must show up in your wallet within moments.
How to Evaluate the Best Memecoins to Invest In
You can’t pick the best memecoins to invest in merely through social media trends. Here’s what to consider:
- Community strength. Memecoin prices are driven by active, organic communities on X (formerly Twitter), Telegram, and Reddit. Look for genuine engagement such as original memes, discussions, new members joining, etc., instead of spam-like repeated price predictions.
- Liquidity and trading volume. A coin with very low liquidity is a trap even if everything else looks good. You might be able to buy in, but selling without crashing the price becomes nearly impossible. Look for tokens with at least several hundred thousand dollars in DEX liquidity.
- Holder distribution. If 80% of the token supply is held by five wallets, those wallets can crash the price at any moment. On-chain tools like Bubblemaps can visualize holder concentration in seconds.
- Team transparency. Many memecoins are anonymous by design, so that’s not automatically a red flag. Satoshi Nakamoto was anonymous, after all. But look for teams that are at least publicly communicative, have a history of follow-through, and haven’t been linked to previous failed projects.
- Listing trajectory. Tokens that progress from small DEXs to larger DEXs to centralized exchange listings typically see price increases at each step. An upcoming listing on a major exchange is a great sign.
Building a Memecoin Portfolio
Don’t assemble a memecoin portfolio the same way you’d set up a retirement account.
Your fundamental principle should be this: only invest what you can lose completely. For every memecoin trade, assume the token might become worthless.
Most investors regard memecoins as only a small slice of a broader crypto or investment portfolio: no more than 5-10% of the total crypto investment and a much smaller proportion of one’s overall net worth.
Try this multi-tiered approach to invest in memecoins:
- Tier 1 (lower risk, lower upside): Dogecoin, Shiba Inu, established memecoins with large market caps and proven communities;
- Tier 2 (moderate risk, higher upside): Mid-cap memecoins with active development and growing communities;
- Tier 3 (high risk, highest upside): Newly launched tokens with small market caps and unproven communities.
Focus your investment towards Tier 1 and be very cautious when investing in Tier 3.
Tips for Safe Memecoin Investment
A perfectly safe memecoin investment might be a contradiction in terms, although there are ways to reduce risk exposure:
- Never trust any recommendations from strangers. If someone is pushing a memecoin in your DMs, they are very likely trying to offload their tokens onto you.
- Realize profits. A major error in memecoin trading is to hold on through a 10x gain, hoping for 100x, only to finally see the price fall right back. Selling a part of your holdings at every significant price milestone ensures you make real profits.
- Use a hardware wallet for large memecoin investments. A hardware wallet like Ledger or Trezor will protect your funds from exchange hacks and phishing attacks.
- Monitor your costs. Since memecoin trading is taxable in most countries, keep track of what, when, and how much you bought, and what you received from sales. That’ll help you file your taxes.
- Decide on exit levels before entering a trade. Think of the conditions under which you will cut your position or take profit, e.g. price levels or percentage gain. Remember that memecoins are designed to get you into FOMO.
FAQ
Are memecoins a good investment for beginners?
Memecoins pose significant risks and are probably the last place to go when exploring the cryptocurrency for beginners space.
For curious and risk-tolerant newcomers, the best strategy to invest in memecoins is to start small and treat this experience as purely educational, without expecting substantial gains.
What is the best memecoin to buy right now?
One cannot universally answer the question of which memecoin is the best to buy at any given time because this market is fickle; a top player last quarter might be hardly visible today.
Instead of following any tip or list, do a thorough evaluation of a token’s community strength, liquidity, holder distribution, and trading volume, as outlined in this guide. Good places to monitor what’s gaining traction are CoinGecko’s “meme” category and DEXScreener’s “trending” section.
How much money do I need to buy memecoins?
One attractive aspect of memecoin investment is low entry barriers.
You can start with a mere $20-50 in a base currency such as ETH or SOL. Just keep in mind that smaller amounts will be disproportionately consumed by gas fees (transaction costs), most notably on Ethereum. Solana network has much lower fees, which makes small transactions more practical.
How do I avoid memecoin scams?
The most important safeguards are:
- always check the contract address before you make any purchase;
- steer clear of tokens pushed aggressively by strangers, such as via unsolicited messages;
- verify the liquidity lock status and concentration of holders using tools like DEXScreener and Bubblemaps;
- avoid any project whose teams are anonymous, have no verifiable history, and offer guaranteed returns.
A safe memecoin investment mindset is to be paranoid by default and require evidence to trust a project.
Do I have to pay taxes on memecoin profits?
Yes, in most jurisdictions you do.
Revenues from memecoin trading are typically treated as capital gains with tax payable. This holds true when one converts a memecoin into fiat and even swaps it for another cryptocurrency. Both scenarios are taxable events.
There are different rules in different countries, and sometimes even by holding period (short-term vs. long-term). That’s why we recommend to keep detailed records of every transaction since your first day. If you trade substantially, consider hiring a tax expert who is familiar with cryptocurrency.
