Cryptocurrencies are a somewhat divisive asset class as a result of their volatility and constant price fluctuations. While some swear by them and see them as one of the best ways to grow and diversify your portfolio, others are suspicious of them and believe that due to their continuous shifts and turns, you can never trust them as a long-term investment opportunity. However, the detractors weren’t enough to cause the market to stagnate, as cryptocurrencies have continued growing and evolving over the years in spite of the periodic corrections.
Right now, meme coins are the category drawing a lot of attention, as their lower prices have made them attractive to newcomers who are looking to mitigate their risks. Dogecoin, Pepe, and Shiba Inu have found their way into the portfolios of many traders from all over the world. Apart from their accessible price points, there is also the fact that these assets provide their investors with a sense of community since they’re based on Internet jokes and memes. Some experts believe that the broader supercycle for speculative coins might be winding down at the moment, yet data indicates that smart money continues to invest. What are the reasons for that, and what could it mean for the larger market?
What is smart money?
The concept of smart money refers to all the capital controlled by central banks, market experts, institutional investors, and other financial professionals. The term was first used in the gambling world to refer to wagers made by gamblers who were particularly successful and more likely to win than not. Smart money is invested on a much bigger scale than retail or individual investments, and understanding all the processes behind the transactions can be quite challenging since these investors are well-informed, experienced professionals.
There are several characteristics that can help you identify smart money. One of the most noteworthy is the presence of large transactions. Smart money investors make strategic investments that they know are likely to yield results in the long term. Insider buying is common as well, given the fact that company executives and board members will undoubtedly have access to information that allows them to make sounder choices. Purchasing assets within a company can be interpreted as a sign of confidence in the future prospects of a certain business.
Smart money investors focus on areas and sectors that show potential and which are likely to experience growth and evolution in the near future. Yet, they are also focused on the long term, as they tend to hold on to their investments for years, allowing them to grow, mature, and yield more revenue as a result. The demographic is also keen on fundamental analysis, including analyzing market trends, management teams, and financial statements. Gaining information from all these different areas increases their likelihood of making good choices and profitable investments.
The current situation
The most successful crypto traders are still looking for ways to make a profit from meme coins despite the recent shifts. Some believe that Trump coin is the reason why the market has been downsizing recently, but that hasn’t detracted smart money investors in the slightest. Most of them remain committed to getting returns from meme coins as well and have continued hunting for them. At the same time, the number of stablecoin holdings has been decreasing, and the same can be said about the more standard cryptocurrencies like Ethereum and Bitcoin. The broader market is sorting out the direction because the same macroeconomy that impacts crypto coins doesn’t have the same effect on meme coins.
The presidential token
Donald Trump’s election as president of the United States was welcomed by crypto investors since they believe that the current administration will look upon the cyber token market much more favorably. As a result, regulations are expected to become clearer, and lawmakers will most likely make choices that support the decisions, strategies, and outlook of traders as well. The official Trump meme coin was released shortly before the president’s inauguration ceremony and recorded considerable gains during the first forty-eight hours, placing it on the list of the most popular cryptocurrencies in the world.
The coin isn’t just a symbol of the president’s views and beliefs but also of his supporters and community. Although the official website dedicated to the coin states that the asset has nothing to do with politics, it was impossible to prevent the connections. Now, some experts believe that the coin’s launch on January 18th might have signaled the end of the meme coin supremacy period. Meme coin launchpads have seen their weekly usage metrics peak during the week of Trump’s inauguration, but they have since shown a steady decline.
The total number of active wallets went from 2.85 to 1.44 million, a decline that is largely seen as stemming from changing investor sentiment. The broader macroeconomic uncertainty plays a role as well since although decentralized finance operates separately from standard marketplaces, it is still influenced by the movements taking place in the world, particularly in the economy and politics. This volatility has meant that the appetite for speculation has also decreased and that investors are much more likely to gravitate towards more reliable transactions and asset classes.
The bottom line
The cryptocurrency market remains as changeable as ever, so investors need to come up with solid strategies that can guarantee the well-being of their portfolios. If you’re an investor, make sure to navigate the following months as attentively as you can in order to avoid potential losses. If you’re not sure about transactions, it’s better to steer clear of it rather than engage and regret it later. If you’re looking to integrate meme coins into your portfolio as well, make sure to do your research in order to familiarize yourself with their concepts and increase your chances of success.
Keep in mind that the market’s volatility can work to your advantage if you learn how to leverage it, but in order to achieve that, you need to come up with a strategy that is perfectly tailored to your requirements and financial goals.
