“GCR Wif Hat” and Re-defining our understanding of Meme coin valuations

The last few weeks have proven incredibly fruitful for crypto investors, as Bitcoin has rapidly risen from the lows set during the initial ETF sell-off all the way into new all-time highs. After FTX collapsed, all-time highs did not always feel like a guarantee, let alone achieving it as quickly within the Bitcoin halving cycle as the present situation. Yet here we are, proudly prospecting more price discovery and speculation for not just Bitcoin, but of course for the beta to Bitcoin- altcoins.

Altcoins have always existed as speculative vehicles to bet on the continued growth of the crypto space, only the method for which people are choosing to enact these endeavors has changed dramatically since the 2020-2021 cycle. Traditionally upon Bitcoin breaking new all-time highs, we’ve seen a rotation of capital into altcoin assets attempting to solve legitimate fundamental applications such as things like Decentralized Finance or payment networks. These were things like XRP and Litecoin in 2018, and Solana and/or Matic (among many, many others) in 2021.

But the programmed response regarding what exactly to bid when Bitcoin breaks out has seen a noticeable change in flavor since the start of 2023, one that leans heavily into absurdity over fundamental utility.

Bonk was the first meme coin to really run hard within the “new” bullish cycle and gave us a taste of what to expect when it pumped to over a billion in market cap before most of crypto twitter even knew it existed. In the Spring of that same year, Pepe re-ignited the appetite for on-chain participants and pumped to almost 2 billion market cap in less than a month while simultaneously stimulating the on-chain economy into another 3-4 months of incredibly risk-on behavior.

These were merely “test pumps” for a broader HTF trend that’s been brewing in internet culture and through our own societies. Let me explain. The crux of the issue boils down to a generation jaded by monetary debasement, being jaded after “deeply-fundamental” assets dumped, and ultimately internet over-exposure.

The first two of these are really worth diving into. Monetary debasement is self-explanatory- not just in the idea of money being printed, but more importantly that your dollars are rapidly losing their value. This trend only appears to be accelerating, and thus the urgency to out-perform holding cash goes up parabolically over a multi-decade period. Wages remaining stagnant is another part of this equation, as it increases pressure and ultimately puts people in a situation where out-pacing inflation becomes necessary to live.

There’s also an entire class of crypto enthusiasts (and possibly two) who bought into assets on the promise of their valuable fundamentals. Sold on the dream that they were investing in the future of finance, these assets dumped all the same when Bitcoin’s bear markets began. What were once revered as truly innovative and useful went zero bid for months and was deemed a scam instead. The harsh truth for many is that many of these were scams, and not just the obvious ones. What is the difference between a coin that rugs to zero and a coin that drops 90-95% with great marketing? Very little. I jokingly call these “VC scams”.

These are driving themes behind the recent surge in memecoins much earlier in the cycle than usual, and behind a shift to absurdity in general in markets. It’s a rejection of traditional investment theses because an increasing portion of active market participants have already had the proverbial veil lifted on the system. It’s a recognition that the broader goal in investing and general asset allocation is shifting away from fundamentals as we know them, and more to out-pacing inflation and the debasement of fiat currency. It’s also a market with a heightened level of awareness after being sold the world in 2021 only to be dumped on to an equitable level as the meme coins it previously derided. This leads to the prioritization of returns and allocation to beta.

Throw in the accessibility of opportunity and cheap transaction fees through networks like Solana, and then voilà- the turbo-bid on meme coins has been born.

So while many would highlight the fact that anybody willing to spend a few million dollars on a meme coin picture of a dog with a hat is perhaps indicative of peak euphoria, the investor himself is only further validating this growing trend. That’s because this investor is “GCR”, a trader that became incredibly well-known throughout the 2020-2022 crypto market cycle for his often omniscient views on the market. Essentially, GCR is “smart money”, and his purchase of this asset might force the market to re-calibrate their opinions on both the short and long-term view of not just $Wif, but also their scope of this meme coin bubble entirely.

The market is communicating that money smarter than “smart money” is comfortable making this investment despite the coin already sitting above 2.5 billion dollars at the time of this writing. We’ve watched Wif trade from zero to a multi-billion dollar market cap in the span of 4 months; thousands of multiples. “This pump is already so insane, surely it can’t go any higher”. As funny as it sounds, Wif is becoming a “blue-chip meme”.

It has acceptance from on-chain participants as well as from the space’s best and biggest while possessing a very low risk of rug. This validation graduates Wif into the next tier of crypto assets, and word spreading of a trader like GCR making this investment will do a lot to completely reset the current meta that Wif has “already pumped”. It doesn’t matter if natives have seen it run thousands of multiples already, new participants will buy into the meme rather than the chart, and the dog has a hat.

That’s a whole lot of words to say that it’s likely going to get a lot crazier for the assets deriving their valuations from famous memes and the collective insanity of a market defined by volatility and blind belief. Wif is just an example within a broader trend of rapidly-changing guidelines for asset allocation. Meme coins are often viewed as a scourge to industry growth and wealth attainment when they can be a solution as well. There will always be a place for real fundamental value, but achieving wealth in our current environment, especially among younger people, is unfortunately not as simple as this. This is not just a market rotation, it’s a culturally-driven shift in market dynamics that might propel meme coins to seemingly impossible valuations over the next few years.