Why does it drop as soon as I buy? Using first principles to calculate the growth spiral of Meme.
Have you ever experienced such a desperate moment:
Watching a screen full of土狗币 (Meme) shouting 'Charge', the K-line goes straight up, and you finally can't help but go all in. As a result, just at the moment you completed the transaction, the K-line seemed to be monitored, and instantly, a big bearish candle smashed down. You panic and cut your losses, and just after you sell, it flies up again.
You start to doubt life: 'Is this operator only focused on my few hundred U?'
In fact, it’s not the operator focusing on you, but rather you don’t understand the 'first principles' of how Meme coins operate. Today, let’s set aside those complex K-line techniques and break down the essence of why Meme coins rise and why you always end up standing guard on the peak.
One, why do you 'buy and then drop'?
In the crypto space, especially in the Meme sector, losing money often stems from misaligned cognition. The three core reasons for novices losing money actually come from falling into the 'emotional trap'.
1. Emotional Lag: When you see the excitement, the feast is already over.
The essence of Meme coins is attention economics.
Phase One (Incubation Period): Only 'smart money' and 'insider trading' are buying, and social media is quiet.
Phase Two (Outburst Period): Early KOLs start making calls, prices rise, and communities begin to get excited.
Phase Three (Peak Period): Your WeChat groups and Twitter are full of posts about trading, and even friends who don't trade coins are asking you 'How to buy that frog coin'. This is when you enter the market.
Truth: When even novices know this is a good opportunity, it means that potential buying pressure has already dried up. Early profit takers are waiting to hand their chips over to you. The moment you buy is the peak of emotion and the starting point of selling pressure.
2. Inventory Games: The cruelty of PVP (Player vs Player)
The current Meme market, especially the ground dogs on the Solana chain, has a very fast pace. This is not 'value investing'; this is a PVP survival game.
There is not an endless amount of off-market funds taking over; the money everyone makes essentially comes from those who enter the market later losing money. You think everyone is 'family', but in reality, everyone is eyeing your principal.
3. The Misleading of Survivor Bias
You see others posting their '100x charts', but you haven't seen the 99 coins that went to zero behind them. This anxiety forces you to rush in before you've done your research (FOMO), and the result is often buying at half the height.
Two, Returning to the Essence: The First Principle of Meme
Elon Musk's praised 'first principles' is looking at the essence through phenomena.
What is the first principle of Meme coins?
It’s not technology, it’s not application, and it's not even the project team.
The essence of Meme = Emotional Consensus + Capitalized Attention.
It is simply a pure emotional carrier. Its value completely depends on how many people believe it will rise and how long that 'belief' can last.
Based on this principle, we can derive a 'Meme Growth Spiral Model'. Only by understanding this spiral can you know when is the bottom and when is the top.
Three, Core Insights: The 'Growth Spiral' of Meme
For a Meme to rise from zero to a hundredfold, it must undergo a positive feedback spiral. We can break it down into four gears:
⚙️ Gear One: Narrative (The Narrative) — Spark
The starting point of everything. Why this dog, not that cat?
Good Narrative: Has punchlines, is simple, easy to spread, and even a bit counter-intuitive.
Case: PEPE. It needs no explanation; it is the sad frog that has been popular on the internet for over a decade. This is top-tier narrative, with built-in traffic.
⚙️ Gear Two: Early Spread (The Spread) — Catalyst
Once the narrative appears, it needs the spread of the core circle (Cult culture).
Focus Points: Is the community 'crazy'? How well-made are the graphics? Are there catchy slogans (like Bitcoin is for money, Solana is for fun)?
Signal: When you find a group of people on Twitter with uniform avatars and speaking styles spontaneously promoting, rather than bots flooding the screen, the spiral begins to turn.
⚙️ Gear Three: Wealth Effect (The Pump) — Fuel
This is the most critical link. Only pulling up the price is the hard truth.
Price increases attract attention $\rightarrow$ Attention brings new buyers $\rightarrow$ Price continues to rise.
Novices must remember: At this stage, the price must keep reaching new highs to maintain confidence. Once it stays flat for too long, for a Meme without fundamentals, it is a death sentence.
⚙️ Gear Four: Emotional Overflow (The FOMO) — Explosion
When the price rises to satisfy everyone, exchanges (CEX) start listing coins, and influencers begin to ride the wave.
Danger Signal: This is the peak of the spiral and the eve of collapse. If you hear about this coin at this stage, please hold back and do not buy!
Four, Classic Case Review: The Legendary Path of PEPE
Let's use the spiral model above to quickly review the trend of PEPE and see where you should have bought.
Start-up period (you can't buy yet): PEPE appears on-chain, this is just a simple contract address.
Fermentation Period (Golden Buying Point): Several knowledgeable 'big dogs' find that this is not just a ground dog, but its meme culture is too strong. Twitter starts to see a large number of high-quality secondary creations of PEPE. (Entering at this time, you are the hundredfold master)
Outburst Period (Silver Buying Point): The price breaks the previous high, early holders do not sell off massively, but instead lock up their holdings. This indicates that 'consensus' has formed.
Peak Period (Retail Investors' Buy Point): Binance announces the listing of PEPE. At this point, good news has been fully released, and early whales begin to offload on exchanges. If you rush in after the Binance announcement, you are likely to be stuck for several months.
Five, Future Direction and Survival Rules for Novices
1. Market Trend: From 'big' to 'fast'
The future market will see Bitcoin (BTC) responsible for a slow bull run, while Meme coins will become the main battlefield for capital games. Public chains (like Solana, Base, Sui) will tacitly support and even promote the development of Memes in order to compete for users.
Trend Prediction: The pace will become faster; in the past, a coin could last a month, but now it may only have a three-day golden period.
2. Novice Pitfall Guide (that can save your life)
Don't go all in: Always play with money you can afford to lose in Meme (like 5%-10% of your funds).
Buy when no one cares, sell when voices are loud: This is hard to do, but it must be etched in your mind. When you feel 'this coin is stable', sell in batches.
Look at market cap, not price: Don't think 0.00001 is cheap. If the market cap is already 500 million USD, it would require 5 billion to rise tenfold, which is harder than climbing to the sky. Look for those with a market cap between 1 million and 10 million USD and a vibrant community.
Use tools wisely: Learn to use on-chain tools (like Binance Square) to check holding distribution. If the top 10 wallets hold 50% of the coins, run fast, that's the butcher's knife.
Conclusion
The world of Meme coins is a naked human nature trial.
The so-called 'buying leads to a drop' is not bad luck, but you have become the last fuel for this growth spiral. To change your fate, you must shift from a 'consumer' mindset (watching the excitement, chasing highs) to an 'investor' mindset (looking at data, narratives, and early signals).
In this circle, slow is fast. Instead of rushing in with money every time, calm down and wait for the moment when the next 'spiral' just starts.
