Reddit is becoming a new hotspot for cryptocurrency speculation. How do we understand word-of-mouth marketing in this context?

Original Article Title: Retail is buying coins, time to look at Reddit data
Original Author: 0xBaba23, Crypto Kol
Original Translation: zhouzhou, BlockBeats

Editor's Note: Retail interest in PEvPE continues to rise, especially after Robinhood's listing, with PEPE's Subreddit seeing rapid growth in membership. This article will analyze retail investors' preference for low-priced tokens and reliance on word-of-mouth marketing psychology. Overall, PEPE appears to dominate in this round of meme coins, and with the expected recovery of the Ethereum ecosystem, PEPE's growth is likely to accelerate further.

The following is the original content (lightly edited for readability):

As retail investors return and start buying coins, we need to consider some factors that were previously less relevant. Retail investors do not understand TVL and have never opened a Dune dashboard. So, will they buy a coin based on analyses that have become common knowledge in the crypto community (CT)?

The answer is no. They will not choose a coin based on in-depth analyses familiar to crypto Twitter users. Instead, their focus is on ensuring their investment portfolio, chasing that legendary 1000x return.

Here are the key factors to consider when understanding retail investors' mindset and their buying behavior:

1. Financial Nihilism: The cost of living is becoming increasingly unaffordable for the average person, and upward mobility opportunities are becoming out of reach for more and more people. Therefore, many are driven by the potential motivation to improve their economic situation.

2. Perception of High Risk, High Reward: They see cryptocurrency as a path to "get rich quick."

3. Word-of-Mouth Guidance: Stories of someone turning $100 into $1 million can spark a frenzy and attract attention.

4. Lack of Knowledge: Retail investors rely on people presumed to be experts—such as Reddit's anonymous users posing as gurus or YouTube influencers.

5. Low Capital Investment: A $100 investment is a loss most people are willing to bear because it signifies the possibility of wealth for generations.

6. Accessibility: Apps like Robinhood make it easy for people to start trading with just a smartphone or computer.

Given these dynamics, I have been monitoring indicators of retail investor interest. YouTube and Reddit are popular destinations for new investors seeking 'alpha.' One key indicator to track is Subreddit membership growth, as Reddit leans more towards retail investors rather than Twitter.

After analyzing many Subreddits, PEPE and BONK showed significant membership growth.

PEPE:

BONK:

In contrast, WIF and SHIB showed slower growth:

WIF:

SHIB:

Key observations from Reddit data:

1. Robinhood Listing is Key: Robinhood's listing can attract retail attention and liquidity.

2. Unit Bias Persists: Retail investors tend to buy tokens with lower unit prices.

3. PEPE Leads the Way: PEPE has recently received the most retail attention.

PEPE's Subreddit saw explosive growth following its listing on November 13, surpassing all other meme coin Subreddit growth. This indicates that Robinhood remains the primary liquidity access point for retail investors. Despite WIF also being listed on Robinhood on November 25, its membership growth lags behind PEPE, even slower than BONK.

Retail investors' obsession with unit bias is particularly evident in Subreddit and YouTube comments. Investors often boast about owning "1 billion PEPE," rather than focusing on the dollar value of their holdings. This mindset stems from a lack of understanding of market cap and FDV (Fully Diluted Valuation)—many people believe that tokens with lower prices have greater upside potential.

PEPE's Subreddit is now the most active among meme coins in this cycle, as evidenced by its continuously growing number of members. This growth has been fueled by the popularity of the "PEPE to $1" topic in the Subreddit—implying a 46,000x return. Although this goal is clearly unattainable, this "to the moon" story is similar to the narratives that once drove the explosive rise of DOGE and SHIB.

Retail investors rely on word-of-mouth marketing, creating a feedback loop: as the price rises, success stories spread, attracting more participants. For example, a retail investor tells a friend that they made 3x on PEPE but are still holding because "it's still early." The higher the price goes, the faster this message spreads.

If these trends on Reddit persist, the data from the Subreddit will become "alpha," indicating retail investors' interest in the token. Currently, PEPE is clearly a winner among this group, and the recovery of the Ethereum ecosystem (along with price appreciation) will further accelerate this growth.

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