A study by Coinwire reveals that most crypto influencers on X have promoted worthless memecoin projects, highlighting the risks of relying on social media for investment advice.
Over three-quarters (76%) of crypto influencers on X have promoted memecoins that are now defunct. Furthermore, two-thirds of the memecoins they promoted were worthless. In contrast, the study found that only 1% of the 377 identified influencers had promoted meme tokens that went on to increase in value by 10 times.
The report highlights the reality that many investors face, as they are encouraged to invest in memecoins based on the endorsement of influencers. It also notes that some of the promotional campaigns carried out by influencers - often outside the scope of regulatory oversight - have led to devastating losses for investors.
The study analyzed the performance of memecoins within 7 to 90 days of being promoted. The results show that 80% of these projects lost up to 70% of their value within a week. After one month, 90% of them had dropped 80% in value, and 86% had declined by 10 times their initial value after three months.
Despite warnings from regulators, many new investors continue to seek investment advice and tips from social media influencers. Some jurisdictions have issued warnings or even attempted to implement consumer protection regulations to manage the behavior of influencers on social media platforms.
However, as in the case of a Gen Z trader who made $30,000 from a rug pull, opportunistic investors often rely solely on X influencers for investment advice. These investors typically forgo their own research and instead wait for signals from influencers, who may be paid up to $399 to promote memecoins.
Meanwhile, the study also found that X influencers with large followings are the ones causing the most significant losses for investors.
"Influencers with over 200K watchers typically have the worst performance. Their memecoin promotion campaigns generate an average negative return of 39% after one week and 89% after three months. In contrast, influencers with under 50K watchers perform better, with a positive return of 25% after one week, and their campaigns ultimately generate a positive return of 141% after three months".
To avoid becoming the next victim of influencer-led scams, the Coinwire research report recommends that investors exercise caution and question the real value of these promotional campaigns.
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Viet Cuong
According to News.Bitcoin
