Meme Coins Like Dogecoin: Fun or Foolish Long-Term Investment?

It's easy to dismiss meme coins. Many started as silly internet jokes and are completely worthless. Even Dogecoin (DOGE) — the king of meme coins — began as an internet joke over a decade ago.

However, a handful of meme coins now rank among the most valuable cryptocurrencies, and meme coins as a whole represent 1.25% of the total crypto market cap. So, is there any legitimate case for them as a long-term investment?

Diversification into Meme Coins

One potential justification is diversification. You don't want all your eggs in one basket, so you need to look beyond just Bitcoin or Ethereum. That leads some investors to consider Dogecoin, which has a $12.5 billion market cap, ranking among the top 10 cryptocurrencies. Other notable meme coins include Shiba Inu, Pepe, and MemeCore.

Unfortunately, there's no easy way to diversify into a mix of meme coins. Investing in a single meme coin is still too risky, and there's no ETF that gives you exposure to a basket of meme coins. The best you can get is a single crypto ETF holding only Dogecoin, which isn't enough diversification.

Beware Meme Coin Math

It's easy to fall into the trap of "meme coin math." Meme coins launch near zero, skyrocket to absurd valuations, then dramatically lose almost all value. They don't go to zero, but they get close.

For example, Dogecoin is down 89% from its all-time high of $0.74 and trades for pennies. Yet it's up 19,000% since its 2013 launch. The numbers can be deceiving: only early investors made money. Everyone who bought in 2021 or later got caught holding the bag.

Memes Are for the Short Run, Not the Long Run

Based on this, it's hard to make a case for meme coins as a suitable long-term investment. There's no good way to get broad exposure, and their long-term return data is mixed at best and downright scary at worst. You can safely exclude meme coins from your long-term portfolio.