Memecoins are back, and the returns are so big that even hedge funds can't resist

• Memecoins are back and they're producing some wild returns even hedge funds can't ignore. 
• Coins like Dogwifhat and Baby Doge Coin soared amid bitcoin's explosive rise in the first quarter. 
• Some argue that memecoins are here to stay this time as they morph into something more than a joke. 

Memecoins have made a comeback amid bitcoin's big rally this year, and with skyrocketing returns in the highly volatile corner of the crypto market, some hedge funds have been jumping in, Bloomberg reported. 

California-based hedge fund Stratos debuted a fund that holds Dogifwhat, a token whose mascot is a dog in a beanie. The coin helped drive the fund to a 137% return in the first quarter, according to Bloomberg. 

Meanwhile, sources told the news outlet that Brevan Howard, the New York-based alternative investment manager, has dipped its toe into the memecoin market with a "tiny" investment.

Coins like Dogwifhat and Baby Doge Coin rocketed to all-time highs last month amidst bitcoin's explosive rise in the first quarter of the year.

Crypto fund Pantera Capital wrote in a recent note that the joke tokens are here to stay amid opportunities for stunning gains. 

Memecoins are easy to create and trade, with decentralized finance exchanges seeing heightened activity in the space, while the tokens have also begun to trade more on mainstream exchanges like Gemini. 

Hedge fund Lekker Capital's founder, Quinn Thompson, told Bloomberg that memecoins are just another chapter in the saga of "retail frenzy," akin to the GameStop and meme stock madness in traditional markets.

But Pantera argued that while many memecoins started as a joke, they've transformed into something bigger, serving as a gateway into a shared belief system or community.