Luke Lango says meme coins are the slot machines of crypto

Who are Jeo Boden, Danold Tromp and Olen Mosk? All three popular names were misspelled has been making headlines lately, and not because the editors got lazy. These prank cryptos were introduced to exploit the fact that all three notable people are leading figures in the daily news cycle. And how Investor Place Analyst Luke Lango points out that meme cryptocurrencies have great potential for viral spread everything.

It may seem absurd to some that cryptos based on misspelled names are increasing in value. But meme coins have taken crypto rallies to impressive heights before, no matter how ridiculous they may seem. Crypto and stock markets always have a gambling aspect.

But in the case of meme coins, Lango believes the analogy is particularly applicable. He recently equated the current crypto rush to the 21st century version of the gambling boom rocked Las Vegas In the 1970s, meme cryptos were portrayed as the slot machines of modern finance.

We don’t need Vegas. We have meme coins.

If this all sounds familiar, it’s because a similar phenomenon took place in 2021. Tokens like Dogecoin (DOGE-USD), Shiba Inu (SHIB USD) And Floki Inu (FLOKI-USD) reached impressive heights. This “Pupcoin frenzy” became one of the defining market trends of the year, as news outlets painted their websites with a staggering amount of Shiba Inu images.

As Lango explains, meme coins are back – and these bizarre new cryptos have plenty of scope. Even if a bet on it is nothing more than a game of chance.

For this reason, Lango compares investing in meme coins to playing slot machines. He points out that in the 1970s, many people had the desire to win the lottery to get ahead in life due to the difficult economic situation. This led her to start gambling and taking trips to Las Vegas just to take a chance on luck. “Now we don’t need Vegas because we have crypto,” Lango says.

Decades later, Lango sees a similar reality emerging for a new generation. Educated, young professionals are still unable to own a home despite multiple degrees and good jobs:

“They’re looking for lottery tickets. They don’t go to Vegas because they have lottery tickets on their phones. [In this case], they are called cryptos. And specifically they are called meme tokens, meme coins, the joke coins.”

It makes sense that tech-savvy Millennial and Gen Z investors are attracted to these cryptos, all of which fall under the umbrella term “altcoin,” as they are alternatives to them Bitcoin (BTC USD). When the Dogecoin surge of 2021 created that initial hype, they immediately understood the cryptocurrency’s title, a reference to a popular internet meme that likely confused older generations.

Reasons for the increase

Why are cryptos enjoying such impressive growth this year? When the fall of FTX brought the entire crypto market to a standstill in November 2022, many speculated that the asset class would never recover. But just over a year later, BTC has surged more than 140% in the past six months to reach its highest price ever.

This is primarily due to the impending Bitcoin halving in 2024. The event is scheduled for April 2024 and will result in Bitcoin mining rewards being reduced by 50% and production rates falling. This will have a significant impact on crypto prices as supply is a key component of the Bitcoin bull thesis. When BTC rises, its competitors inevitably follow.

As Lango points out, these Bitcoin-fueled booms ultimately lead to a rise in altcoins as well. When BTC’s dominance temporarily wanes after halvings, investors’ focus often shifts to the less mainstream cryptos. This means that altcoins currently on the rise could continue their momentum as they climb what Lango describes as a “wall of worry”:

“You can see a bit of a pioneering role in this at the moment […] But I think these meme tokens, just given the historical pattern here, the historical precedence, [are] probably in the second or third inning, which will end up being several quarters higher.”

In other words, these bizarre meme cryptos are likely to continue their upward trend. But if that’s the case, how should investors evaluate the best stocks to buy before this madness ends?

Invest in joke cryptos

Lango emphasizes that choosing meme coins is not at all the same as investing in stocks or leading cryptos like Bitcoin or Bitcoin ether (ETH-USD). Factors such as a cryptocurrency’s leadership, fundamentals, and growth potential do not matter for meme coins. In fact, in his opinion, investors should take the opposite approach to joke cryptos and focus on tokens whose creators readily admit that their projects serve no purpose other than to have fun and make money.

Take one of Lango’s favorite meme cryptos, Pepe (PEPE-USD), as an example of a meme coin with upside potential. One of the reasons he likes it is because the token’s creators have acknowledged that its only functionality is as a meme.

“It’s transparent, it’s honest, it’s the devil you know. [Pepe is] Don’t pretend to be more than it is. It is an online slot that is exactly what people want and what they use it for. That’s why I think it can work.”

Additionally, Lango acknowledges Pepe’s logo, whose eye-catching nature will likely help it go viral. “[The] Frog, it’s ugly, it’s grotesque and it’s hilarious. It’s a hilarious looking frog, just its aesthetics, not to mention its attachment to anything […] It has virality potential,” says Lango. Joke crypto colleague Dogwifhat (WIF-USD), which features a photo of a Shiba Inu wearing a knit hat, has the same potential. “It just grabs your attention when you’re scrolling.”

How long will it take?

As always, when meme coins surge, investors should consider how long the hot streak can realistically last. The crypto boom/bust cycle that Lango highlights typically begins a year before the Bitcoin halving and ends about a year after. With the halving event now fast approaching, Lango predicts that the BTC rally could last into 2025. This means that the joke crypto rally could also continue during the same period.

It is impossible to predict exactly when these tokens will fizzle out. But at least in the short term, they appear well-positioned to continue growing on the meme dynamic, especially if investors continue to win on the digital slots of their generation.

On small capitalization and low volume cryptocurrencies: InvestorPlace does not regularly publish commentary on cryptocurrencies whose market capitalization is less than $100 million or whose trading volume is less than $100,000. Because these “penny cryptos” are often a playground for fraudsters and market manipulators. If we publish a comment on a low-volume crypto that may be affected by our comment, we ask InvestorPlace.com writers to disclose this fact and warn readers of the risks.

Read more: How to avoid popular cryptocurrency scams

At the time of publication, Samuel O’Brient did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.