Why is it difficult for meme coins to break the $50,000 market cap? This market is draining retail investors' funds

When "creating a false sense of community" becomes an industry, retail investors can't wait for the next PNUT.

Written by: @StarPlatinum_

Compiled by: AididiaoJP, Foresight News

I have been trading meme coins for three years. What frustrates me the most about this market now is that it has become very difficult to determine whether the buying pressure for a token is created by real buyers or if it is a facade created by the project team before you even see it.

This scenario has repeated itself hundreds of times. A new token launches on Pumpfun, starts to gain some traction, the number of holders increases, the trading volume looks decent, a few familiar faces start discussing it, and suddenly the market cap reaches $50,000, only to crash to zero. Sometimes it can spike to $100,000, $200,000, or occasionally $300,000, but the outcome is usually the same: the price collapses, and everyone starts complaining about the lack of buyers, and a few minutes later, another token pops up.

I used to think that many projects fail due to insufficient demand. But there is another explanation that I believe more people should be aware of: a significant portion of the community hype you see is fake from the very beginning.

In 2024, the rules have changed

When meme coins weren't so competitive, getting in early did have its advantages. You discover something interesting, buy it before everyone else, wait for the narrative to spread, and then hope to sell to stronger demand. There are certainly risks, but at least the people buying alongside you have a reasonable probability of making independent decisions.

Today is different. A token can appear to have hundreds of holders and active trading, but in reality, most of the supply is held by the same group. The worst part is that all of this can happen before ordinary traders even notice the token.

This is where "bundling" comes into play. With tools like Jito, token creators can coordinate multiple wallets to buy simultaneously, locking in a significant portion of the supply at the earliest price. When you first look at the holder list, these wallets may seem unrelated. But from a funding perspective, they could belong to the same entity.

Imagine this: launch a token and use ten wallets to acquire 40% of the supply. Those analyzing the holding distribution would think that these are ten independent traders who bought early. In reality, one entity controls the ten wallets.

The numbers are worse than I expected

Bitquery analyzed 8.2 million Pumpfun projects from October 2025 to October 2026, and the conclusions are grim.

21% of Pumpfun projects had wallets associated with developers participating in issuance bundling, with a median holding supply of 10%. During the study period, developers and their associated bundling wallets collectively profited $579 million. More critically, among the tokens studied, 65% of developers began selling within the first minute of launch.

Think about that number. Most retail investors haven't even figured out what they bought, and some are already exiting.

Bitquery recorded an extreme case from June 2026. A developer launched a token with a very small initial buy-in. Four wallets in the same Jito bundle spent $6,000 to acquire 79% of the supply. The token almost immediately "graduated," and in the next 18 minutes, 1,138 wallets flooded in. Meanwhile, the five early wallets had already sold their holdings for $121,000—having spent a total of $11,000, yielding an 11-fold return in 18 minutes. Someone had to pay for that money; spoiler alert: it was retail investors.

Even trading volume is deceiving you

This is really frustrating. Trading volume used to be one of the first things I looked at when evaluating a token. A project with a trading volume relative to its market cap might indicate real interest. But what happens when creating fake trading volume becomes a service anyone can buy?

According to another Bitquery survey, during its analysis period, 58% of the $201.4 billion trading volume in Solana DEX pools was classified as non-genuine trading, amounting to about $117.7 billion. A significant portion came from extremely simple operations: coordinating the buying and selling of the same token in the same transaction. In other words, the data that seems to indicate trading activity might just be bots repeatedly buying and selling.

Add to that the artificially manipulated number of holders. Developers can distribute small amounts of tokens across dozens of wallets, creating repeated trades that make the project appear much more active than it actually is. Then comes the marketing—this playbook is something you already understand. A few Telegram groups start mentioning it, some accounts on X post charts, and a certain KOL shouts out a recommendation; by the time you see it, it’s already too late, the game is over. However, all of this is likely coordinated by the same group waiting to sell.

This is also why I believe so many tokens die at a $50,000 market cap.

KOLs shouting recommendations may be offloading

I’ve been on crypto Twitter long enough to know that not everyone promoting a token is involved in coordinating operations. Some genuinely believe in what they are buying, some just misjudge, and others, yes, are getting paid. The problem is that these three types of people may look identical to those scrolling through Twitter.

If you start selling immediately after posting a recommendation, those who trust your suggestion are effectively providing liquidity for your exit. Imagine doing this repeatedly: different tokens, different codes, different narratives, but the outcome is the same. This is why I believe that looking at a person's trading history is becoming as important as looking at the token itself. A KOL with a profitable entry record doesn’t necessarily mean they are good at spotting opportunities. Sometimes it just means they got in before the audience they are about to lead to that token. No one talks about who is selling when recommendations are shouted out.

So how do you protect yourself?

I don’t think the solution is to stop trading all tokens with bundling. Not every bundling is malicious. Some teams use coordinated issuance to manage sniper behavior, and independent snipers might buy in the first block without any connection to the developers. The key difference is what those wallets do afterward.

Personally, I believe traders need to spend more time figuring out who owns the supply. Tools like Bubblemaps, Trench Radar, and Solscan can help you check early buyers, wallet associations, and token distributions. If a group of wallets bought a significant proportion of the supply in the issuance block, I want to know if they still hold it. If several top holders' SOL comes from the same source, I want to understand why. If a token has limited liquidity but suddenly shows abnormal trading volume, I want to know if that’s independent buying and selling. If someone is heavily promoting it, I want to know if their wallet is accumulating or distributing.

But there’s another problem: the manipulators are also improving, and they will adapt. They use different funding sources, spread purchases across multiple blocks, recycle wallets, and find new ways to make coordinated behavior look like natural behavior. This means that tools to help retail investors identify manipulation will never be perfect. You still have to think for yourself.

Deeper issues

Solidus Labs estimates that 98.6% of Pumpfun tokens exhibited characteristics of price manipulation during its study period. I believe this is one of the reasons the current market has become so different. People keep asking: where is the next PNUT? Where is the next token that will rise from thousands to hundreds of millions of dollars? Why does it seem like nothing can sustain a narrative?

Perhaps part of the answer lies in the fact that this industry has turned into a business—pulling liquidity out before the narrative takes shape. Genuine communities are increasingly struggling to compete with another group: their entire business model is to create the illusion of a "community." I believe this issue is much larger than many people realize.

What does this mean?

I still believe there are opportunities within meme coins; otherwise, I wouldn’t spend time tracking this market. But I also think that the days of blindly buying anything that starts to heat up and expecting the market to reward you are fading. When you buy, others already own half the supply; being "early" is not enough; you now need to understand the structure of the trade.

Once again, I don’t believe meme coins will disappear. But the continuous draining of the market is gradually destroying the interesting conditions that once existed. It’s really quite sad to think about how this market used to be.