- Bonk is a meme coin launched on Solana on Christmas Day
- Its value has risen by nearly 2,500%
- Meanwhile Solana has struggled amid associations with Bankman-Fried and the exodus of major projects from the blockchain
- Our analyst says this is not a favorable environment for memecoins
It feels like a blast from the past. Twitter this week has been dominated by conversations about Bonk, a dog-themed token on the Solana blockchain. There is a certain nostalgia to the renewed focus on an old-school meme token — all it would take to complete the throwback would be a global health scare and a few Elon Musk tweets, and we’d be back in 2020.
The Shiba Inu–styled token was launched on Christmas Day and has since surged roughly 2,500%. At the time of writing, its price jumped 150% in the last hour alone.
What makes this especially striking is that Bonk debuted on Solana, a network that has faced serious challenges over the past several months. Yesterday I published an in-depth analysis of Solana’s decline, highlighting a wave of leading projects leaving the blockchain, repeated outages that caused major disruptions, and the damaging association with Sam Bankman-Fried that has weighed on the token’s price.
Still, despite its troubles, Solana has seen a modest rebound coinciding with Bonk’s breakout. The token climbed back above $13 on Tuesday after dipping as low as $8 last week. According to Coinglass data, nearly $7 million in short positions were liquidated — the largest such event since the FTX collapse in November.
Layer 1 appears to be benefiting from the sudden surge of interest in Bonk. The project announced a substantial airdrop — 50% of its supply — to generate buzz and adoption. That strategy appears to have worked: Bonk’s market capitalization now sits around $120 million and it follows the familiar playbook for meme coins.
Why is Bonk rising?
As with any meme coin, pinpointing the exact cause of Bonk’s rise is difficult. It largely comes down to marketing, momentum and a bit of luck. Numerous Solana projects have integrated Bonk as a payment token, and the $BONK ticker has been highly visible on Twitter, fueling social momentum.
Ultimately, this is the same kind of speculative frenzy we’ve seen repeatedly over the past several years. Meme coins are, at their core, a form of high-risk gambling. What makes the current move notable is that it is happening during a generally bearish period for both Solana and the broader market.
Over the past year, higher interest rates and tighter liquidity have driven risk assets lower. Meme coins, among the most speculative assets, were hit hard as investors fled riskier exposures.
What’s next for Bonk?
My clear warning to any investor (or gambler) is that Bonk is an extremely risky bet, like any meme token. It currently offers near-zero intrinsic utility, which means that, over the long term, the token is likely to underperform and could fall to near zero.
That reality is widely understood by the market, yet speculative interest can still drive dramatic short-term price moves. In today’s environment of tighter monetary policy, the speculative mania that characterized the pandemic-era retail investing boom is far less pronounced. This is not an ideal climate for gambling on memecoins — even before considering the reputational and technical issues that have plagued Solana.