In Cryptoland, Memecoin Fever Gives Way to a Stablecoin Boom

When the American president Donald Trump launched his own cryptocurrency on January 17, a few days before his return to the White House. I was halfway up a Swiss mountain pasture, attending a cryptography conference in the town of St. Moritz.

Memecoins, which generally have no use beyond financial speculation, were falling on hard times. The previous year, millions of new memecoins had flooded the market; a few, like Fartcoin, had reached billion-dollar valuations. Pump.Fun, a memecoin launch and trading platform, has become one of the fastest-growing crypto launchpad companies of all time. Now the future president got down to business.

Over lunch on the second day of the conference, under the ornate stucco ceiling and gilded chandeliers of the venue’s dining room, I found a table reserved for a conversation about memecoins. While the other tables were half full, the memecoin workshop was oversubscribed; latecomers pulled out chairs to create two full rows.

The discussion was led by Nagendra Bharatula, founder of investment firm G-20 Group. Bharatula had recently co-authored an article arguing that memecoins, despite their youthful spirit, have a place in professional investors’ portfolios. Over the previous six months, a basket of 25 “bluechip memecoins” – an oxymoron if ever there was one – had outperformed bitcoin by 150%, he noted. Some attendees murmured their approval.

Since then, the memecoin market has lost its luster. The paper value of Trump’s coin, which hit a high of $14 billion two days after its launch, has reached about $1 billion. Hundreds of thousands of small investors lost their shirts. Pump.Fun’s daily revenue, an indicator of the general appetite for memecoin trading, is just over a tenth of what it was in January. The memecoin gold rush has spawned a series of disputes.

Next: the stablecoin. If memecoins symbolize reckless abandon and unwavering profit in the land of cryptocurrencies, stablecoins are the symbol of the industry’s search for meaning and respectability. Designed to maintain a stable valuation of $1, stablecoins are touted by their proponents as a faster, cheaper way to make everyday payments and international money transfers.

In a year in which the United States declared itself open to crypto trading, while crypto companies previously feared regulatory backlash under the Biden administration, stablecoins have supplanted memecoins as a trendy currency — and broken through into the mainstream.

Although stablecoins have been around since 2014, they have primarily been used by crypto traders as a safe haven during periods of market volatility, not ordinary people. The concept also faced resistance from regulators skeptical of a new form of money; Diem, a stablecoin company incubated at Meta, closed in 2022 amid widespread opposition.