How Memcoins are Moving Markets For Almost 100 Years

Disclaimer: This article is published for educational purposes only. Not an investment advice. Do your own research before buying any assets and do not invest more than you can afford to lose.

This week, everyone is excited about Notcoin listing and speculating about its price. The whole thing with popular assets with “low” prices began in 1934 (!) and it was actually the Securities and Exchange Commission (SEC) that started the party and caused people to believe in Bitcoin, and shaped the way for NOT listing.

Welcome the Penny stocks, the original low-priced assets with big hopes! In this article, we’ll explain why people love buying such assets, how those assets make to the major league, and why memecoins and low-cap tokens are beneficial for the whole crypto ecosystem.

What Exactly are Penny Stocks?

In 1934 the U.S. Securities and Exchange Commission (SEC) officially started using “Penny stocks” term to describe shares that were trading for less than $5 per share, or, as the SEC said, for “pennies on the dollar”.

The definition has changed through the years, and now SEC calls them “Microcap Stocks”. The term defines a public company with a market cap lower than $250 million and shares that aren’t listed on stock exchanges like NYSE or NASDAQ.

Penny stocks are trading at Over The Counter (OTC) desks, or, in other words, on a peer-to-peer market. They have limited liquidity and are highly volatile, which makes them a perfect investment decision for stock traders who are trying to get rich fast.

Those cheap shares aren’t really as bad: in 2023, at least five small US companies had their shares surging by more than 100%. Moreover, Apple, Ford, and AMD once were considered Penny stocks just because they started trading low.

Why Are Penny Stocks Popular in Investors’ Circles?

First, they are a bargain. With just $1 you can buy a whole share! Choose what sounds better for you: “I bought 0.3 TON” or “I bought a few thousand of this XXX token”.

Second, they really can grow in value. It’s easier to imagine that a $1 million company to grow to $10 million than that the Nvidia shares will grow from $900 to $1000.

Third, Penny stocks have catchy names and are well-promoted. There are dedicated bullet-ins writing about those cheap securities and telling people how their value can rise if something good happens with the company.

Why do Penny Stocks Matter Today?

If you started thinking that Penny stocks have many similarities with memecoins and low-priced tokens, you are right:

• They are trading “penny on the dollar” — most memecoins are trading for less than $0.01 no matter their market cap.
• No major CEX listings — memecoins and low-cap tokens are trading on DEXes.
• Memecoins are brought to the market by promoters — KOLs, dedicated channels, marketing stunts, etc.
• They are highly volatile — a small-cap token can rise 2–10x in a month in the bull market, while Bitcoin grows for a few percent.
• They are ignored by the masses — until one major exchange lists them.

Understanding similarities between Penny stocks and low-cap tokens matters because cheap stocks have almost a hundred years of history of trading, and we can incorporate this knowledge into DYOR flow to make better investment decisions.

BTW, check our educational article about DYOR to learn how to filter and evaluate on-chain projects and their tokens.

Shifting Penny Stocks Trading to Memecoins and Low Cap Projects

People trade them to make money faster than with the regular stocks — that’s the only reason someone buys them.

So first, before buying a token, check if it has a possibility to grow 2–10x. For example, tsTON, the token of Tonstakers liquid staking protocol, can’t grow 2x in a year because of its nature. tsTON represents staked TON and accumulated staking rewards and constantly grows in value at 4% APY. It provides low risks with steady rewards, while Penny stocks-like tokens usually provide high risk, high reward options.

Second, look at the hype. It’s not a secret that memecoins and small tokens are subject to market manipulation and shilling, and retail investors can earn from it. A well-marketed project might rise for a time long enough to take profits.

Third, a low-cap project loses its bad fleur when it gets a chance to be listed on major exchanges. Notcoin (NOT) got listed on Binance and other CEXes and this is an excellent sign.

Ethereum DeFi tokens surge started when the centralized exchanges started listing them. The same happened with memecoins on Solana, as the whole SOL market started rising along with listings.

Now it might be TON projects’ turn, with NOT listings bridging the accessibility gap and its “Penny stock” nature making the general public interested. It trades below $1, luring people to buy it. It was listed on Binance before the TON itself — it leads the way for more TON jettons listings. It makes the people talk about TON, growing the awareness. It swings 20% in a day, attracting speculators and liquidity. In the best case, NOT will create a new niche on centralized exchanges — a niche for TON projects.

Conclusion

Penny stocks and fresh cryptocurrencies have a lot in common, from low capitalization to highly volatile prices with prospects to grow.

While the name is fun, it is important to watch them closely: the most innovative companies once were Penny stocks, and the most influential Web3 projects were low-cap too. Follow our guide to DYOR to filter out bad projects.

Listings are one of the most significant milestones a low-cap project can achieve. They not only receive attention from retail and institutional but also spotlight the whole ecosystem. We hope the Notcoin listing will make the TON ecosystem shine brighter than anything before.