Article written by: Bennie

Rave surged from $0.25 to a peak of $18 within a week, increasing more than 70 times. It appears to be a lucrative business, but the real question to ask is not "Will it rise again?" but rather "Where exactly did the money we made come from?"

In many meme coin markets, price increases do not stem from real growth, but rather from price manipulation by market makers, sentiment spread, and chip structure. It is essentially not value creation in the traditional sense, but more like a game with a high degree of information asymmetry.

To understand meme coins, one must first grasp why they can rise.

The core logic can be summarized in four words: "Supply and demand imbalance."

To illustrate with a simple example: Suppose the village head, Bennie, has a large apple orchard, but the apples won't sell. The market price is originally $10 per pound, so he starts continuously buying apples in the village at prices of $11-$15, gradually reclaiming most of the circulating apples into his hands.

When the vast majority of apples in the market are concentrated in the village head's hands, he effectively gains pricing power. At this point, others wanting to eat apples can hardly find enough in the free market and have to ask the village head for prices. This process is essentially controlling the supply.

Next, if a narrative emerges in the market, such as "eating the village head's apples can extend life," demand will be quickly ignited. Under low circulation and strong supply control, as long as new buying pressure continues to flow in, the price will be rapidly pushed up. Apples can rise from $10 to $20, then to $50, and even to $100.

The problem is that apples do not actually extend life. When the price strays far away from its intrinsic use value and fundamental support, those who ultimately buy in often just end up with a heap of overpriced apples; while the earliest controllers and the first to sell exchange them for real money.

Looking at the crypto market, many meme coins rely on low circulation and strong supply control to artificially push prices up. Market makers and large funds control not just the price itself, but more importantly, the "invisible hand" of the market.

Recently, many meme coin market makers may control over 95% of the circulating chips in the market, and low circulation can further amplify price elasticity. Through extremely low spot circulation, they can control a token with a very high market value, such as the recent $rave, or the previous $river, etc.

So why do I not recommend most people to participate in such coins easily?

First, ask yourself three questions.

Do you know who the market makers behind this project are? Do you know what they have done in the past?

Do you know how much capital they can mobilize both in and out of the market?

Do you know the chip structure, control rate, real circulation, and potential selling pressure of this coin?

If you cannot answer any of these three questions, then you are not investing; it is essentially no different from a casino in Macau, like sitting at a card table with opaque rules. And at such a table, the dealer knows all of your cards, the expected value (EV) over a long timeline is always negative, and for retail investors, participation is possible, but fate is always in the hands of the dealer.

Of course, market making is not a 100% profitable business; there are market makers who faced disasters on October 11 and those who once operated miraculous coins, where profit-sharing and insider trading are not as straightforward as everyone thinks.

Recently, @binance has also tightened regulations for project parties and market makers, clearly cracking down on price manipulation. In the long term, such constraints are beneficial for market health, allowing true value investment to occur in crypto.

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