Memes are the new asset class that remains one of the most life-changing sectors of this cycle. From a fun and tiny market, it grew into dominating the headlines for the last 12 months. We rode the wave of memecoin mania, saw our predictions come true, and celebrated big wins, and we are not shy about highlighting them.

WIF rose over 120,000%, POPCAT over 68,000%, and SPX rose over 16,000% from our calls to their all-time highs. We didn't miss when we were choosing these memes; they have the best communities, memetics and potential to be outperformers in the right environment. However, we are noticing a worrying trend that we cannot ignore. So, let's talk about what we are seeing right now in the market.

In this report:

• Why memecoins are stalling
• Revisiting price targets
• Portfolio strategies
• Cryptonary's take

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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The Ceiling effect: Why memecoins are stalling

We've been watching the market closely, and something interesting, maybe a bit alarming as well, is starting to show up. Memecoins from the 24/25 class seem to be hitting a hard ceiling. No matter how hyped the vibes are, how big the communities get, or how many Tier-1 listings they score, they just can't break past the $5B market cap ceiling.

For example, PNUT caught the pre-election hype but topped out at around $2.5b. POPCAT, once the strongest chart in crypto, started struggling at around $2b. WIF reached the highest ceiling among memes, topping at $4.9b.

By the way, it's not just memecoins. The whole market, from AI tokens to other hot trends, is facing the same issue: simply not enough liquidity to keep pushing higher. As a result, every shiny new narrative seems to last around 6 months and fizzles out. AI16Z and Fartcoin are the best examples of non-memes narratives hitting their ceilings. After massive runs, both topped out at around $2.6b market cap along with the rest of the AI pack.

The game of hot ball of money with constant rotations is exhausting, and it's like the market has an invisible ceiling for new narratives and tokens.

But why is this happening? Aren't we in a bull market? First of all, there is a strong dispersion in the market. The number of tokens is increasing exponentially, and over 30m different tokens are fighting for liquidity and attention at the moment.

This is quite crazy as it is causing massive fragmentation in liquidity and attention. That is why the narratives aren't sticky, and coins are quickly losing momentum and mindshare. Everyone wants to catch the next 100x, and thus, rotations are ruthless, and the narrative cycles are getting shorter and shorter.

For comparison, in previous alt seasons, we had fewer than 3000 tokens in the market. Liquidity was plenty for every token. Now, the market is absolutely flooded with assets, and there's no end in sight. The supply of tokens far outweighs the demand, and unlike before, the wealth just isn't trickling down anymore on PumpFun, VC unlocks, or the endless stream of new launches every single day.

The only real exception is Trump's recently launched memecoin, which has achieved a staggering $15 billion in circulation and a $75 billion fully diluted valuation at the top, surpassing even OG memes such as DOGE. But let's be real-it's an outlier that sucked up so much liquidity that it has left the rest of the market, aside from BTC, feeling like a full-on Player-vs-Player (PvP) battleground.

Therefore, this cycle is mostly dominated by BTC, with select outperformers popping up here and there.

It's been 2 years since the bull market started, and BTC is over $100k while being 5x from its lows. Bitcoin's dominance continues climbing up while most of the market hasn't experienced any bull like in previous cycles, and those very few that run are still struggling after a certain threshold.

The market is telling us something, and we need to adjust our positions, whether we like it or not. What we believe is likely from now on is that new coins and trends will continue to come and run anywhere between $3b-5b, but the chances of $10b-$40b market caps are much slimmer than they were 6 months ago. Therefore, it is important to adjust our expectations and play the market accordingly.

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Revisiting price targets for our meme picks

First of all, we should acknowledge that all initial base targets for our meme picks played out pretty well. We had base targets of $1b market cap for all three picks, and we have seen WIF reaching $4.9b, POPCAT breaking the billy curse and becoming the first cat meme to run to $2b, and SPX reaching $1.6b just recently.

However, the probability of our top-end bull targets has decreased in the last couple of months. We are still up massively from when we called our meme picks, and we are still bullish on them.

But, we need to be real; the market trends have shifted. It is alarming to see BTC around $100k while memes and majors are at current levels. If you asked where the ETH and SOL would be when BTC crosses $100k, our answer would be much higher than $3k and $250. Market dynamics have shifted, and BTC is in its own cycle.

Therefore, we believe it is important to reevaluate our bull targets for our meme picks. Let's look at the probabilities of our picks reaching price targets, starting with WIF.

We have done a lot of thinking before coming up with these numbers. In general, we remain positive about our meme picks; however, we see a lot of dispersion and ceiling when it comes to their upside potential.

Community and memetics still remain top-notch, and we believe if the meme narrative starts picking up again, our picks still have a chance of making a significant statement.

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Portfolio strategies

Okay, so another important question is what you can do with your portfolio based on this information. First of all, if you have been in these assets since sub $100m, you are still up significantly. If that is the case, book some profits. The last thing you want to do is roundtrip all your gains. Take some chips off the table and have dry powder when the next solid opportunity arises.

Second of all, we were huge advocates of the barbell portfolio, where you balance risk with low-risk assets like BTC, ETH, SOL and HYPE with high-risk assets like WIF, POPCAT and SPX. The high-risk end of the portfolio is struggling; however, the low-risk end still has performed as expected and is acting as a solid foundation. That was the whole purpose of using the barbell strategy: to minimise the downside while still having a decent upside.

If you are down 30% on your portfolio, it is likely that your portfolio was relatively well-balanced, even though you might have entered near the top on meme picks. Or you fully ported memes with decent entries.

In either case, consider reallocating to majors and stables. The market is extremely PvP at the moment; however, it will present great entries at some point. So, it is important to have dry power when opportunities arise.

If you are down 50% on your portfolio, your portfolio wasn't well-balanced and leaned toward memes. It was a good run for you for a bit, but it is likely you haven't taken profits along the way or after we called for derisking at the beginning of the month. It is still recommended to trim some portions of the high-risk end of the portfolio and rotate to majors or stables.

If you are down 80%, it is likely that you weren't allocated to the low-risk end of the barbell and were predominantly allocated to memes. The Barbell portfolio prevents massive drawdowns on the portfolio while retaining the upside potential. What you can do here is try to get out of losing positions at relief rallies. The market will always present another life-changing opportunity, and you don't want to be without any dry powder to capitalize on it.

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Cryptonary's take

We are fairly confident that this cycle hasn't topped yet, and BTC+majors will be much higher by the end of the year. While liquidity for the rest of the market might remain uncertain, the bigger picture is clear and stronger than ever, with institutions and nation-states embracing it.

Dispersion is real however, and there seems to be a ceiling for how high memes can go right now, but that doesn't mean the game is over. In fact, we still believe in memecoins, and our picks have the best chances to outperform the market if market conditions improve.

Memes are already a legitimate asset class that isn't going anywhere, and the recent memecoin ETF applications and Jupiter acquiring MoonShot speak volumes about memes as an asset class. That makes us very optimistic.

However, we're 2 years into this cycle and 5x from BTC lows. ETH and SOL are stuck at their ranges, with BTC at $100k. It's clear that capital flow and investor confidence are currently centred around BTC, leaving the rest of the market in a state of chop or even a violent bloodbath. With this new information, we think it is MUCH easier for a coin to go from the $0 to $5b range than it is for a coin in the $1b-5b range to go to $10-$50b.

The barbell portfolio was designed so you have exposure to a wide range of risks and maintain a balanced exposure to the market. Overall, this strategy performed really well if you kept your exposure balanced across the barbell. However, we shouldn't be in denial and adjust our expectations accordingly. Lastly, this market is far from done. In fact, the biggest opportunities are still ahead. And when they present themselves, you don't want to be the person with no dry powder.

Peace!

Cryptonary, OUT!