The Complex Dynamics Between Memecoins and Social Media Influencers
In the world of cryptocurrency, a recent investigation highlights the challenging relationship between memecoins and social media influencers on platforms such as X (formerly known as Twitter). The study, conducted by Coinwire, unveils a concerning trend: a significant portion of these influencers have endorsed memecoins that have since lost all value.
Minimal Success Stories Amidst Widespread Failure
Coinwire’s research sheds light on the bleak reality of memecoin promotions. Only a minuscule 1% of these tokens experienced a tenfold increase in value, despite the substantial hype generated by influencers on X. A staggering 76% of these influencers have been linked to now defunct memecoins. This revelation exposes the darker side of the memecoin market.
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Coinwire’s analysis involved over 1,500 memecoin promotions conducted by 377 influencers on X, scrutinizing their performance and impact on investors.
The Influence of Smaller Followings
Interestingly, the study found that influencers with smaller followings tend to achieve better results. These individuals, often possessing less than 50,000 followers, employ more genuine promotional tactics, yielding higher returns. Within one week, they garnered a 25% positive return on investments, which surged to over 141% within three months.
In contrast, influencers with larger audiences, exceeding 200,000 followers, delivered disappointing results. Their promotions resulted in 39% negative returns after a week, worsening to 89% negative returns within three months.
Factors Contributing to Poor Performance
The study attributes the lackluster performance of larger influencers to their focus on monetary incentives rather than the quality of the projects they promote. Coinwire reports that these influencers earned an average of $399 per promotional tweet that garnered at least 15,000 views. While influencers profited from these promotions, investors often faced significant losses.
The cryptocurrency market currently boasts a market cap of $3.22 trillion, yet the findings raise ethical questions about the responsibility of influencers in promoting digital tokens, as their endorsements frequently mislead investors.
The Downfall of Influencer-Driven Memecoin Promotions
The study further reveals that approximately 86% of influencer-promoted memecoins experienced a 90% decline in value within three months. Within a week, 80% of these tokens had already decreased by 70%, and after a month, 90% had plummeted by 80%. Achieving a tenfold gain through influencer-backed promotions remains an elusive goal, with only 1% of memecoins managing such growth.
