Matt Hougan, Chief Investment Officer at Bitwise has recently argued that the memecoin boom is towards its end, due to regulatory risks and high profile misuse cases surrounding the memecoins (cases such as Melania Trump’s NFT project, Meta’s defunct Libra Initiative, and North Korea’s Lazarus Group).
This decline could be linked to Bitcoin’s current price drop, as the loss of energy from memecoin boom’s end creates a temporary drag on the market.
End of Memecoins and Regulatory Pressures
The memecoin market which saw some really successful token projects such as Dogwifhat (WIF) and Pepecoin (PEPE) rally over 1,000% earlier this year has lost its fizzle amid regulatory scrutiny.
Blockchain analysts attribute this decline to three main factors. First, Melania Trump’s “1776” NFT collection on Solana sparked heavy criticism for using and leveraging political branding to promote a speculative asset. This caused a shift and drew regulatory attention to memecoin-linked projects.
Second, Meta’s abandoned Libra stablecoin project popped up in discussions as policymakers reassess risks posed by unbacked digital assets. Most critically, the Lazarus Group linked to North Korea has reportedly laundered $147 million from 2022 Harmony Horizon Bridge hack through Tornado Cash, using memecoins as intermediate vehicles.
All of this has accelerated calls for stricter anti-money laundering (AML) rules specially for decentralized exchanges and memecoin issuers.
Institutional Momentum Builds Around Bitcoin
While the memecoins are on the verge of a downfall right now, institutional adoption is gaining traction as of now.
This demise of memecoins can become the catalyst for Bitcoin’s next bull run. As the institutional investors are increasingly turning their attention to digital assets. Over 30 states in the US have proposed establishing National Bitcoin Reserve due to which Bitcoin’s price could experience a significant rebound.
With the change in leadership at the regulatory agencies, upcoming regulatory clarity, and infrastructural development underway, the stage is set for a new wave of Bitcoin adoption.
Matt also mentions that the areas such as stablecoins, tokenization and DeFi are in its growing phase and will play a significant role in the future of crypto. Stablecoins will provide a stable store of value, tokenization will unlock new asset classes, and DeFi will enable decentralized financial applications.
However, until these new developments gain significant attraction, the market may experience a temporary downturn, contributing to Bitcoin’s current price drop.
At press time, the price of the Bitcoin token stands at $86,917.61 with a dip of 8.0% in the last 24 hours as per CoinGecko.
Nevertheless, with predictions from industry experts, there could be potential market upswing between June-October, and the US National Bitcoin Reserve bill likely to pass, Bitcoin’s price could be set for a significant rebound.
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