A recent report showed the troubling reality of the relationship between memecoins and social media influencers on X (formerly Twitter), revealing a high failure rate.
The study conducted by Coinwire found that two-thirds of cryptocurrency influencers on X have promoted memecoins that are now worthless.
Small Fraction Got A 10X Increase
Recent research discovered that only a small percentage of memecoin promotions attained exponential growth, saying that 1% of these promotions increased the value of the token tenfold. It is a dismal rate considering the hype being created by X influencers on such promotions.
Coinwire said that the now-defunct memecoins have been promoted by more than 76% of X influencers. An analyst noted that the findings which showed that the majority of influencers promoted “dead tokens” only reveal the dark side of memecoins.
The cryptocurrency news platform examined more than 1,500 memecoin promotions by 377 X influencers and analyzed its performance.
Paid KOLs: How Twitter Influencers Promote Dead Tokens and Profit While You Lose
1/ The hype around memecoins hides a harsh reality: 76% of influencers promote dead tokens, and 86% of memecoins lose 90% of their value in just 3 months.
Let’s dive into the data. 🧵
2/ It… pic.twitter.com/CCy6Tnc7pt
— Keto (@keto_studio) November 25, 2024
Small Following, Better Results
Coinwire disclosed that smaller influencers achieved better results than larger influencers, saying that they have more “genuine promotion” practices which led to higher returns.
According to the study, X influencers with less than 50,000 followers attain better outcomes, saying that after a week, they achieved 25% positive returns. After three months, positive returns further went up by over 141%.
Meanwhile, the same study showed that influencers with larger followings got dismal promotion results.
The news platform explained that influencers with more than 200,000 followers are the worst performers, highlighting that their promotional activities brought 39% negative returns after a week, and after three months, it even got worse at 89% negative returns.
According to a Coinwire research report, 76% of cryptocurrency influencers on the X have promoted Memecoins that have now returned to zero, only 1% of the promoted Memecoins have achieved a tenfold increase, and 80% of the promoted Memecoins have plummeted by 70% in a week.… pic.twitter.com/EWmmymAS2N
— Wu Blockchain (@WuBlockchain) November 25, 2024
According to researchers, one of the reasons for their dismal performance is that these influencers focused more on getting financial incentives than considering the quality of the projects they endorsed.
Coinwire said larger influencers generated an average of $399 per promotional tweet for each post that reached at least 15,000 views, adding that influencers got financial gains from the promotions while memecoin’s investors absorbed losses.
As of today, the market cap of cryptocurrencies reached $3.22 trillion. Chart: TradingView
The findings raised the question of the responsibility of influencers in promoting the digital token, saying that most often these influencers misled the investors.
Influencer-Driven Memecoins Promotion Led To Failure
Coinwire revealed that about 86% of memecoins promoted by influencers dipped its value by 90% after three months.
The study added that after a week, 80% of influencer-promoted tokens went down in value by 70% while after a month, 90% of these coins lost 80% of their value. On the other hand, a tenfold drop is experienced by 86% of promoted memecoins after three months.
According to the report, it is nearly impossible to attain a tenfold gain with influencer-backed memecoin promotions since only 1% of these will hit that growth rate.
Featured image from DALL-E, chart from TradingView