76% of influencers on X have promoted memecoins that are no longer in existence

A new study from Coinwire reveals that most influencers in the crypto space on X have promoted worthless memecoin projects, highlighting the risks of relying on social media for investment advice.

Influencers causing investor failures

More than three-quarters (76%) of influencers in the crypto market on X have promoted memecoins that are no longer in existence. Furthermore, two-thirds of the memecoins they promoted are worthless. In contrast, the study found that only 1% of the 377 identified influencers promoted meme token projects that subsequently increased in value tenfold.

The report clarifies the reality that many investors are facing, as they are encouraged to invest in memecoins based on endorsements from influencers. The report also points out that some promotional campaigns conducted by influencers – often outside the oversight of regulatory authorities – have led to unfortunate failures for investors.

The study analyzed the performance of memecoins over a period of 7 to 90 days since being promoted. The results showed that 80% of these projects lost up to 70% of their value within just one week. After one month, 90% of them had decreased by 80% in value, and 86% dropped up to 10 times their initial value after three months.

Despite numerous warnings from regulatory bodies, many new investors continue to seek advice and investment 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 influencers on X for investment advice. These investors tend to overlook self-research, instead waiting for signals from influencers, who can be paid up to $399 to promote memecoins.

Meanwhile, the study also found that influencers on X with a large following are the ones causing the biggest losses for investors.

"Influencers with over 200K followers typically have the worst performance. Their memecoin promotional campaigns yield an average negative return of about 39% after one week and 89% after three months. In contrast, influencers with fewer than 50K followers show better results, with a positive return of 25% after one week, and their promotional campaigns ultimately yield a positive return of 141% after three months."

To avoid becoming the next victim of influencer-led scams, Coinwire's research report recommends that investors exercise caution and question the true value of these promotional campaigns.