CoinWire’s recent research highlights the risks of investing in meme coins, especially those promoted by influencers on X (formerly known as Twitter).
Despite promising huge profits, research shows that the majority of these Tokens lead to huge losses for investors.
The promise of quick wealth is often enticing, but most investors are chasing a mirage. New report by CoinWire analysis 1,567 meme Coins were supported by 377 influencers in the past three months. Unexpected results: 76% of influencers promoting “dead” coin memes — Tokens lost over 90% of their value.
Additionally, the report also found that two-thirds (about 67%) of meme coins promoted by influencers are now worthless. The report determined that after three months, 86% of influencer-promoted meme coins lost tenfold in value. Only 1% of influencers who successfully promoted a meme coin achieved a tenfold increase.
Short-term performance is equally disappointing. After just one week, 80% of promoted Coin memes lost 70% of their value. By one month, the loss had skyrocketed to 80%.
Influencer endorsements often promise explosive profits, creating a time that attracts even inexperienced investors. However, data shows that most of these campaigns prioritize influencer profits over the quality of the projects promoted.
Influencers with more than 200k followers typically fare the worst, with an average loss of 89% after three months. Meanwhile, smaller influencers, with fewer than 50k followers, delivered better results, with some even seeing gains over time.
On average, influencers earn $399 per promoted tweet, which incentivizes them to support Coin memes regardless of their viability. This financial consequence often causes their audience to suffer losses.
X’s Role in the Meme Coin Boom
The challenge with influencer-backed tokens is not an isolated incident. TinTucBitcoin recently reported that 97% of all meme coins fail, only 15 of the 1.7 million achieved sustained success. The reasons are diverse, from lack of applicability to poor project management.
The meme coin ecosystem is also rife with controversy. Blockchain investigator ZachXBT recently discovered 16 influencer accounts on X coordinating pump-and-dump schemes, causing followers to incur losses. This has sparked debates about the ethical responsibilities of influencers in the cryptocurrency market.
Meanwhile, X remains the main platform for promoting Coin memes among influencers. The platform’s ability to amplify excitement makes it an effective vehicle for meme coin promotion but also a source of financial risk.
Despite the disappointing figures, some traders still find opportunities in this volatile market. Cryptocurrency figures like Justin Sun, founder of TRON, suggest that coin memes should be evaluated based on community size, story strength, and applicability.
Meanwhile, crypto influencer Miles Deutscher recently shared a four-step meme coin trading plan: focus on market timing, tokenomics analysis, understanding the project platform, and risk management risk through stop loss strategy. Taken together, these approaches reflect the importance of caution and thorough research.
While the prosperity surrounding the Coin meme is undeniable, this context emphasizes the need for caution. Influencer promotions, while attractive, are not a reliable indicator of a Token’s potential. Investors should carefully consider projects, considering factors such as applicability, community involvement and long-term viability.