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Bitcoin (BTC), the largest and oldest cryptocurrency, has dominated the current crypto market surge. Bitcoin has name and brand recognition, it’s the number one asset by market capitalization, and thanks to the recent U.S. Bitcoin Spot ETFs, institutional capital is flooding into it at record pace.

Today was the second biggest volume day for the ten U.S. spot Bitcoin ETFs, at about $5.5b. $IBIT alone did $2.4b of it and has crossed $11b in AUM.  Each of them is up over 30% in 6 days. In fact, with Bitcoin currently at $67,512, up 7% in 24 hours, Bitcoin looks ready to break the all time high any day now.

While Bitcoin is comfortably outperforming the altcoin markets, there are some exceptions. Most of those exceptions are memecoins. This week’s memecoin rally might be a early sign of the upcoming altcoin season, that typically occurs once Bitcoin hits a new all time high and has a chance to settle.

Memecoins are an incredibly popular and volatile subset of the crypto markets. Memecoins are blockchain-based tokens that are based on popular pieces of internet culture. They are generally characterized by having minimal utility and extreme volatility. If you identify with cute dogs, the edgy Pepe frog, or President Trump, there is a memecoin for your tribe.

PEPE, WIF, FLOKI, and BONK lead the Memecoin charge

Infamous dog-themed tokens dogecoin (DOGE) and Shiba Inu (SHIB) have effortlessly jumped by 90% and 200% this week, while newer memecoins like Pepe (PEPE), Bonk (BONK), and Dogwifhat (WIF) have done even better.

DOGE and other memecoins have seen days of relentless buying this month.

Memecoins have been popular with retail crypto investors who see the more affordable unit prices and lower market caps as an opportunity. The lack of fundamentals or a pretense at seriousness is a feature, not a bug. The vast majority of crypto retail investors have no desire to learn about composable privacy, and the esoteric differences between five different layer 2 solutions. But a meme? If there is one thing today’s extremely online retail traders understand, it is the power of a meme.

In past cycles, memecoin rallies have tended to take place at the market top, some analysts say this time is different, and it’s due to a rise in financial nihilism, according to a thesis by Ikigai Fund Manager Travs Kling.

Kling published a two-part thesis on the current crypto bull market cycle. In part one in early February he wrote that, “BTC has essentially a free walk to ATHs. We just got spot BTC ETFs, which unlock safe access to BTC for trillions of dollars that haven’t previously had it. The halving is a few months away. The Fed is likely to cut rates multiple times this year. Stocks are at ATHs and look like they’re heading higher. BTC ATH is up ~55% from here. We can argue about the pace to ATHs (1H-24, 2H-24, 1H-25) and we can argue about how far beyond prior ATHs we’ll eventually go this cycle ($75k, $90k, $100k, $120k, $180k), but the path to ATH looks incredibly straightforward. It will likely just “happen” because we have ETFs and the Fed is easing. We’ve never had a setup like that before.”

Less than one month later, and the above has come to pass. Bitcoin has walked up to less than $2000 away from its ATH. Well played by Mr Kling. It was the main part of his thesis, however, “A Lack of Pretence That Any of This Shit Does Anything or Will Ever Do Anything” that captured people’s attention.

Kling argued that this crypto bull cycle will see an altcoin rally driven by the concept of “financial nihilism” – the idea that cost of living is strangling most Americans; that upward mobility opportunity is out of reach for increasingly more people; that the American Dream is mostly a thing of the past; and that median home prices divided by median income is at a completely untenable level. As a result, the younger generation has turned to gambling, from sports betting to memecoin investing in an attempt to win big.

In part 2 of this thesis, published on X today, Kling unpacks his thinking further. He wrote that the term Financial Nihilism is credited to Demetri Kofinas, the host of the Hidden Forces podcast. Kofinas first introduced the concept several years ago, stating that it goes hand in hand with Populism – a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups. The underlying drivers of Financial Nihilism and Populism are the same – this system is not working for me, so I want to try something very different (e.g., buy SHIB or vote for Trump).

What are the drivers of Financial Nihilism? Kling says, “the chart of median home prices to median household income is the single most emblematic symbol of Financial Nihilism in my opinion.”

Source: Twitter

Kling argues that the Baby Boomers and GenX bought all their houses at about 4.5x annual income. “Then subprime lending fueled the housing bubble and the bubble collapsed. Not long thereafter, Millennials entered the workforce and got to the point where they could start buying houses at ~5.5x annual income. Then Covid happened, the Fed printed $6 trillion, and now houses are 7.5x annual income, much higher than even the peak of the housing bubble. Simply out of reach for many millions of Americans under 40. The numbers just don’t add up.”

Kling says “From 1989 to 2023, the total value of US real estate held by households went from $7tn to $45tn, nearly a 7x increase. In 2020, when the youngest Millennial turned 25, Millennials held 13% of total real estate value. In 2005, when the youngest GenX turned 25, their share of housing wealth was 17%. And in 1989, when the youngest Boomer turned 25, they already had 33% of total real estate value. Kind of a raw deal for the current generation of young folks, right?”

As a result, then the rise of Financial Nihilism amongst young people is hardly surprising. They’ve watched the rich continue to get richer, while real wages fall, and inflation soars leading to the current cost of living crisis. If you’re part of the large majority of the population, not just in the U.S., but around the world that is seeing the dream of financial independence slipping away, what do you do?

“You take bigger risks,” writes Kling. “You feel driven to take bigger risks to try and leapfrog from your current financial position (mostly paycheck to paycheck; buying a home feels nearly impossible; saddled with student loans; salary increases not keeping up expense increases) to something more tenable. More comfortable. More baller.

So you gamble. You. F**king. Gamble. You look anywhere, for anything, that can give you a 5:1, 10:1, 50:1 type of payout. Naturally, you look to literal gambling, which is growing at a breakneck pace.”

Source: Twitter

Yes indeed, says Kling. The evidence of Financial Nihilism is everywhere. Think about the cultural movement that was WallStreetBets, Gamestop, AMC, Bed, Bath & Beyond, Blockbuster. And of course, crypto and memecoins.

Source: Twitter

Kling concludes his thesis writing that crypto is now a populist movement. He says it’s a “countercultural movement. A YOUNG PERSON’s movement. Boomers don’t get it. It’s “our” thing. It’s the one thing we can actually beat Boomers at (so far). Regardless of whether Boomers show up to crypto now, in the coming years, or not at all, eventually they will leave this world behind for that big country club in the sky.”

Kling believes that Financial Nihilism will be a key driver of crypto price action, especially in the altcoin markets this cycle. “You can wish that weren’t the case. You can wish the crypto market would be more sound-minded. More sober. More focused on providing solutions to real problems. More rooted in reasonable valuation methodologies. Less bubble-ish. But I believe those wishes will be left ungranted. At least this cycle. There’s good reason to think this market is going to shitcoin harder than ever this cycle. That there will be an even greater Lack of Pretence That Any of This Shit Does Anything or Will Ever Do Anything. That we will blow an even bigger bubble and subsequently collapse an even bigger bubble. The drivers of Financial Nihilism and incentive structures that come along with it are simply too overwhelming. Act accordingly.”

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