Memecoins are often the main characters in ‘rags to riches’ stories. However, since the inception of meme launching platforms like Pump.fun, it has become tedious to funnel down coins that have the potential to upscale portfolios.
Background
- Investors who are new to the arena often rely on what stalwarts from the space advocate
- With crypto starting to gain mainstream attention, masses have started diverting funds to get a piece of the ATH profits pie
- However, they aren’t being guided in the right direction
- In a recent survey, 377 ‘Twitter influencers’ with at least 10,000 followers who frequently promote memecoins were identified
- Then, a list of 1567 memecoins that were promoted by them were jotted down
- Findings proved that a “large proportion” of influencer-driven promotions are essentially setting up investors for failure
Why should you pay attention?
- Every 2 out of 3 memecoins promoted by influencers are dead
- In this context, a memecoin is considered dead if its current token value has decreased by at least 90% since its initial promotion
- 86% of influencer-promoted memecoins lost 90% of their value in 3 months
- Only 1% of influencers advocated memecoins that notched up 10x
Who said what?
- The report findings noted,
“Promotions rarely live up to their promises. Promotions often mislead new investors, who jump into these projects without understanding the associated risks”
- Interestingly, influencers with over 200k followers tend to have “the worst performance”
- Their memecoin promotions result in 39% negative returns after one week and 89% negative returns after three months
- Contrarily, influencers with less than 50k followers have shown better results
- They’ve managed to help fetch 25% positive returns after one week, with their promotions eventually bring 141% positive returns after 3 months
Zooming out
- It is “exceedingly” rare it is for influencer-backed memecoins to yield significant returns
- The higher the followers, the worse the promotions
- The research results brings to light a troubling truth: Influencer-led memecoin promotions are “largely detrimental” to the average investor
