According to a Bloomberg report, hedge funds are now being drawn towards crypto memecoins in their pursuit of greater profits. Stratos, a fund based in Newport Beach, California, and backed by prominent investors Marc Andreessen and Chris Dixon, saw gains of 137% in Q1 by including dogwifhat (WIF), the largest memecoin on Solana (SOL), in its portfolio.

Rennick Pallet, the founding partner of Stratos, stated, “The unspoken truth is that if the fund isn’t doing it, the people working at the fund are doing it.” This suggests that even if hedge funds are not officially investing in memecoins, their employees are doing so independently.

While memecoins originated as a joke, with the launch of Dogecoin (DOGE) in 2013, the growing comfort with digital assets in general is leading more hedge funds to take the sector seriously. Pallet believes that as people become more familiar with the concept of memecoins, firms may even create meme-only funds, similar to the creation of NFT-only funds.

Cosmo Jiang, a portfolio manager at Pantera Capital, a crypto hedge fund, describes memecoins as “culture coins” that offer unofficial membership to a particular group or movement. He explains that memecoins have evolved beyond their initial purpose as jokes and are now seen as a way to belong to a culture or community with shared beliefs.

Josh de Vos, research lead at CCData, points out the rapid evolution of liquidity and infrastructure in the memecoin sector, making it more accessible to traditional finance firms that are normally cautious of low liquidity. The improved infrastructure includes better liquidity for various tokens and the development of sophisticated futures markets by centralized exchanges, enabling hedge funds to take advantage of the volatile movements of memecoins and hedge their exposure effectively.

As of now, DOGE remains the largest memecoin with a market capitalization of $22 billion, but it faces competition from Shiba Inu (SHIB) with a market cap of $15 billion, and WIF with a market cap of $3.2 billion.

To stay updated with the latest news, readers can subscribe to receive email alerts from The Daily Hodl. It is important for investors to conduct their own research and exercise caution when making high-risk investments in Bitcoin, cryptocurrency, or digital assets. The Daily Hodl does not provide investment advice or act as an investment advisor. Additionally, readers should be aware that their transfers and trades are done at their own risk, and any losses incurred are their responsibility. The Daily Hodl does not endorse the buying or selling of any cryptocurrencies or digital assets. The publication also participates in affiliate marketing.