Spin the Memecoin Wheel: What are the Odds of Becoming a Memillionaire?
Starting to feel some FOMO on X as your feed is flooded by tweets of influencers with screenshots of their crypto wallets with $1M+ returns from meme coins?
Ever since the meteoric rise of Dogecoin to a top 10 cryptocurrency in 2021, meme coins have become a permanent fixture in the crypto space. Dogecoin has been followed by other meme coins like SHIB, PEPE, and more recently BONK. With every rise of a meme coin, there is an explosion of stories of early investors making millions from their investments.
But just how likely is it that the latest meme coin trending on X makes you a millionaire?
Let's find out.
Firstly, some key assumptions
Working out the probabilities of making millions from a meme coin can be quite tricky. Let's ground them in three key assumptions:
#1: Investment amount: $1000 USD
- Let's start by assuming you are not a crypto whale with tens of thousands of dollars to throw into meme coin investing
#2: Full Diluted Valuation (FDV) of the meme coin at investment: $1M
- Let's assume you buy into the meme coin early (but not too early)
#3: Investing strategy: Buy and Hold
- While many investors will actively trade meme coins, let's assume you are in it for the long term and hold the meme coin for >1 year. This simplifies that analysis as we do not need to account for a “perfect trader” (e.g., one who buys at all-time lows and sells at highs)
The odds of becoming a millionaire
With these three assumptions, to become a millionaire you need to 1000x your investment. We can use FDV here as a proxy to estimate this, rather than market capitalization (as market capitalization can increase based on an increase in the supply of tokens alone). This means to become a millionaire you would need to invest $1000 into a meme coin at $1M FDV and hold until it hits $1B.
The list of meme coins that have gone from $1M to $1B FDV is an exclusive list, with only four coins (DOGE, SHIB, BONK, and PEPE) ever achieving this feat.¹
The next step is to estimate how many meme coins have been created in the history of crypto. CoinMarketCap has around 1500 current meme coins listed in their “meme” category. This number likely dramatically understates the number of meme coins that have existed, as it does not include:
- Dead meme coins
- Meme coins that never reached sufficient volume to be included on CoinMarketCap
- Meme coins that were rug pulls
There is no concrete figure on the number of meme coins ever created, but with potentially 100s of meme coins made every day it is likely there have been >100k. For this analysis, let's go with a potentially conservative figure of 100k.
Therefore for any given investment in a meme coin at an FDV of $1M, the odds of becoming a millionaire are 4 in 100,000 or 1 in 25,000.
To put this in perspective, the odds of winning the jackpot in Powerball is about 1 in 292.2 million.
Not too bad for a meme coin investment?
Well not so fast.
These assumptions mean that you would need to be very early to get in at a $1M FDV. For Dogecoin, you would need to have bought it way back in 2013 (for $0.0002) and held it for more than 8 years to become a Dogecoin millionaire. In fact, for each of the other three billion dollar meme coins you would need to have bought essentially right at launch.
The probability of both 1) Investing in a meme coin that hits $1B FDV and 2) Investing at $1M FDV (or below) is magnitudes worse than 1 in 25,000.
The condition of having to invest early into a meme coin also opens you up to the very real risk of meme coin investing: rug pulls/scams.
With this in mind, let's look at meme coins from a different angle. What is the range of outcomes you could reasonably expect from a meme coin investment?
Return profiles from a meme coin investment
The first obstacle in any meme coin investment is avoiding a rug pull or a scam. Rug pulls are particularly common in meme coin investing, largely as the costs of launching a meme coin are so low.
It's difficult to estimate precisely what percentages of meme coins are rug pulls, but the number is likely to be very high. For example, crypto scam sleuth ZachXBT identified one wallet that created 114 meme coin scams in just 1.5 months. While one wallet launched between 2–5 meme coin rugs every day for nearly 2 years. A report by the blockchain analytics firm CipherTrace identified almost 1,000 meme coins that were rug pulls (or suspected to be) in 2023 alone.
Let's say you manage to avoid a rug pull, what kind of return profile is possible?
Looking at the distribution of meme coins by FDV, we see a classic Pareto distribution. The vast majority of meme coins are worth less than $1M, with only 14 worth more than $100M. With only 115 meme coins with greater than $1M FDV, this is a 115 in 100,000 or 1 in 869 chance that a given meme coin investment at $1M FDV will net you a positive return.
This analysis is a point-in-time one, so ignores the volatile nature of meme coin investing. Many meme coins will go well above $1M FDV only to subsequently crash to $0. While traders may attempt to time the market and sell when the meme coin is at its highs, it introduces an element of luck/skill and also risks selling a potential $1B FDV meme coin early.
Conclusion
Many liken meme coin investing to gambling — and they are not wrong. The base expectation for any meme coin investment is that it will eventually go to zero (either from a rug pull or from hype subsiding and the price crashing).
The above analysis makes several simplifying assumptions to derive some rough probabilities for a returns profile of meme coin investment. While certainly imperfect in nature, it can give some high-level grounding for what to expect.
Despite this, the numbers don't lie — millionaires can be made from meme coins, just not as frequently as some influencers would make you believe
- Note: “Memecoin” (MEME) has been excluded from this analysis. Although it currently has a >1B FDV, based on Coingecko data Memecoin never traded at $1M FDV (making it impossible to generate a 1000x return)
