In the crypto market, meme coins often tell tales of rags-to-riches with their sudden price spike. A recent revelation by Lookonchain, an on-chain analytics platform, shared such a story.
Lookonchain further detailed the transaction timeline. It showed the strategic timing of the purchase.
KITTY’s Meteoric Rise as The Roaring Kitty Come Back
A lucky trader capitalized on a great market opportunity. They bought 17.4 million Roaring Kitty (KITTY) meme coins for 21.2 Solana (SOL), worth about $3,000.
When the meme coin’s value soared by over 6,000%, the trader made a profit of 294 SOL. This figure amounts to roughly $41,000.
However, the trader still has 4.6 million KITTY left, which is valued at around $56,000. In total, this trader made a profit of $94,000, marking almost 32 times more than their initial investment.
Keith Gill, a financial analyst known as The Roaring Kitty online, sparked the price increase. His return to social media platform X (formerly Twitter) made traders speculate on the KITTY meme coin.
Gill, renowned for his pivotal role in the GameStop stock frenzy of early 2021, had been away from the public eye since retreating in late 2021. His unexpected return with a symbolic tweet was enough to excite meme coin traders. They quickly respond to trends and the activities of public figures.
Besides propelling KITTY’s price, Gill’s comeback influenced another meme coin, GameStop (GME). At the time of writing, GME saw an approximately 376% increase in 15-minute time frame charts.
Read more: How to Buy Solana Meme Coins: A Step-By-Step Guide
GME/SOL Price Performance. Source: DEX Screener
Despite these success stories, Lookonchain cautioned regarding the inherent risks in meme coin trading, such as potential rug pulls. In the crypto market, rug pull is a scenario where developers abruptly remove liquidity, leaving investors with worthless tokens. This warning was highlighted in another Lookonchain report involving the Vibe Cat (MINETTE) meme coin, where a trader turned 999 SOL into $2.5 million in just 15 hours.
“Note that the developer of VibeCat (MINETTE) did not burn LP tokens, there is a risk of rug [pull]. At the same time, insiders will dump large amounts of tokens on you,” Lookonchain wrote.
Meme coins can yield significant returns overnight. However, they require a deep understanding of market trends and influencer impacts. Crypto trader Rasgard shared several key strategies for trading meme coins effectively.
He suggests investing small amounts one is willing to lose. He also recommends understanding market dynamics. Understanding the broader Bitcoin market sentiment is important as it significantly influences meme coin values.
Additionally, Rasgard stresses the value of joining a trading group and how social media is crucial to meme coin popularity. These strategies can be beneficial in terms of decision-making.
Nonetheless, he warns against scams and suggests performing safety checks on meme coins. Watching out for market manipulation by large holders is also important.
Read more: 13 Best Solana Meme Coins to Watch in 2024
Indeed, meme coins can bring high returns. Yet, they demand careful strategy and a clear understanding of the risks involved.
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