Fundamental Analysis of Meme Coin: Sentiment, Belief, and Community

Meme coin, as a special category in the cryptocurrency market, has value drivers that differ from traditional assets. This article will explore the "Fundamental Analysis" of meme coins from multiple perspectives, including their relationship with Layer 1 assets, on-chain data analysis, community activity, and investment strategies.

The Relationship Between Meme Coins and Layer 1 Assets

Some Meme coins exhibit high beta characteristics against Layer 1 (L1) assets. This means that through moderate allocation to Meme coins, a leveraged effect on L1 assets can be achieved without using actual leverage. Taking a cultural coin from a certain Solana ecosystem as an example, when its 30-day beta exceeds the 90-day rolling beta, significant short-term gains often occur.

This high beta characteristic makes Meme coins a tool for taking high-risk/high-return bets on L1 assets. However, it is important to note that the performance of L1 assets does not fully guarantee the outstanding performance of the related Meme coins.

On-chain Data Analysis

On-chain data provides us with quantitative indicators to assess the quality and beliefs of Meme coin holders:

1. Token Holder Growth Rate
2. Median and Average Holding Amount
3. Proportion of large holders (> $1000 and > $100k)
4. Whale Retention Rate
5. The net inflow/outflow of giant whales on decentralized exchanges

These indicators help us understand the popularity of the Token, the strength of holders' beliefs, and the behavior patterns of large investors.

Liquidity and Market Depth

In addition to on-chain data, Meme coins with sufficient trading liquidity that have experienced multiple significant pullbacks are worth paying attention to. The open interest is also an important indicator of market participation.

Community and Belief Factors

The value of Meme coin largely depends on the strength and belief of its community. When evaluating the Meme coin community, the following points should be considered:

• Resonant narratives and community slogans
• Strong belief and sense of belonging among community members
• Community leadership and coordination skills
• Cultural Integration Level
• Social Media Marketing Strategy

Powerful Meme coin communities often possess excellent marketing capabilities, able to attract a wider audience.

Investment Strategy

Fair Value Assessment

The "fair value" range can be assessed by implementing the value to market value ratio (MVRV). When MVRV is below 1, it may indicate proximity to a local bottom, but this must be based on an optimistic outlook for the overall market.

Momentum Analysis

In the absence of traditional Fundamental Analysis, technical analysis indicators such as the Relative Strength Index ( RSI ) and moving averages can help determine the timing for buying or selling.

Social Sentiment Indicator

Tools like Google Trends can reflect the public interest in meme coins, helping to grasp market sentiment.

Macroeconomic Environment

Meme coins are highly sensitive to liquidity conditions and overall market risk appetite. A favorable macro environment and the return of "animal spirits" are key prerequisites for allocating Meme coins.

Conclusion

Investing in Meme coins requires a comprehensive consideration of multiple factors, including their relationship with L1 assets, on-chain data performance, community activity, market momentum, and the overall macro environment. Although these analytical frameworks cannot completely eliminate risks, they can help investors make more informed decisions in this high-risk, high-reward market.