The memecoin market is a high-risk environment where investors can make or lose a lot of money very quickly. One trader in the memecoin market recently lost $2.5 million trying to invest in a memecoin called $MEW.
He first bought an enormous amount of the memecoin to try to pump up the price and then, after not very much time, he sold it and took a huge loss. This story has a happy ending for the trader because he is still trading and presumably has some amount of money left to keep him safe and solvent.
A daring $1.8 million entry into $MEW started things off, but it quickly became a series of large-scale purchases that led to a disappointing payout. The memecoin had the initial momentum and media buzz, but the price couldn’t support the enormous inflow, and by the time the trader decided to exit, more than 47% of the capital had evaporated.
The Big Bet: $5.39 Million in $MEW Buys
As per on-chain information and observations from cryptocurrency expert @Ace_All_In, the wallet responsible for this transaction saw its initial funding of $5,525,700 made through Binance. That was ten months ago. What followed was a considerable and, in the end, not very successful bet placed on $MEW.
The first big move took place on July 29, 2024, when the wallet made a deposit of 10,000 SOL, which was then worth around $1.8 million, into a trading account and promptly used it to purchase 280 million MEW tokens. In the following days, the trader ramped up the action, making a string of consecutive large buys: doubling down, in Wall Street lingo.
- $1.8 million snagged 280 million $MEW
- $1.79 million got 273 million $MEW
- $1.03 million purchased 157 million $MEW
- A host of lesser acquisitions between $200,000 and $220,000 each, purchasing 20 to 34 million tokens per transaction
The wallet in total acquired around 828.6 million MEW tokens for about $5.39 million. This buying strategy inflicted price slippage, causing entry prices to rise and exit prices to fall. Why would anyone do this? Because the accumulated tokens were staked. If you stake MEW, you earn rewards in the form of MEW. Thus, for the better part of two years, the wallet that had bought MEW with an average cost of 0.0065 per token was generating returns at every opportunity.
https://twitter.com/StalkHQ/status/1928836073242644489?t=Xk9dS0lWEnVjZ6MTYbjpyA&s=19
The Exit: A Sharp $MEW Turn and Heavy Losses
Today, the same wallet sold the entire MEW position for $2.83 million. The trader’s liquidation marked a staggering $2.56 million loss, or roughly 47% of the total capital deployed.
Why did such a sharp drop occur? Timing was key. The memecoin hype cycle is notoriously very brief, and when it comes to liquidity in these small cap coins, it can dry up just as quickly as it can flood in. When the trader entered, it looked like a top, but it was a local top. When the trader exited, it was a post-hype situation. In between their entry and exit, the trade was cooling off.
Another major factor was slippage. Given the relatively thin liquidity pool, large purchases were almost bound to push prices up artificially. If you reckon the price moves made during the buy with the price moves that happened during the exit, you start to get a sense of how much buying and then selling was able to move the price around. And given that the exits weren’t timed well and, when they started, were also way too large to do in a sensible way, the price drops that happened during the sale timing part of the strategy also didn’t help the price recover.
Lessons Learned in the $MEW Memecoin Wild West
The trade with $MEW has now become a cautionary tale for both retail and institutional traders. Although memes can generate enormous profits, they consistently rank among the most unstable artillery in the crypto space. With almost no use-value and price action driven mostly by sentiment, viral moments, and short-term hype, when you get in and out and how you do it are all that matter.
Some key points to remember:
- Risk management is critical. In a span of three days investing in a singular memecoin, an amount of $5.39 million was deployed. This did not leave much room for either strategic exits or DCA-based defense in what was essentially a poor liquidity situation.
- Liquidity must be considered. If you’re going to make a large buy, especially in a low-liquidity asset, you really need to consider what that might do to your (and others’) attempt at a profitable exit when the price reverts to being less stable than it seemed when the buy was made.
This result is clear for this trader: betting large on $MEW cost them more than half their capital. Some may hold their risk-taking up as a model for how to operate in the still-nascent world of cryptocurrency, but this case reminds us that even in a crypto market driven by memes, size, timing, and patience as a virtue still matter.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
No Comments