A new comprehensive study by CoinWire has revealed a disturbing pattern in the memecoin market chaos, showing that the vast majority of cryptocurrencies promoted by social media influencers end up virtually worthless.
The research, which analyzed over 1,500 memecoins endorsed by 377 influencers on Twitter, found that 76% of these tokens have lost nearly all their market value. The data paints a grim picture for investors who follow influencer recommendations.
The decline happens rapidly - within just three months of promotion, 86% of influencer-backed memecoins plummeted by 90%. Even more concerning, 90% of these tokens crashed by 80% in their first month after launch.
Success stories are remarkably rare in this space. Only 1% of influencers have ever promoted a memecoin that achieved a 10x price increase. Similarly, just 3% of all promoted tokens ever reached this milestone.
Counter-intuitively, the study found that following larger accounts led to worse outcomes. Influencers with over 200,000 followers promoted tokens that generated 39% losses within a week. Meanwhile, smaller accounts with under 50,000 followers achieved better results, with their promoted tokens showing 25% gains after one week and 141% returns over three months.
While investors face heavy losses, influencers profit handsomely from these promotions. The average promotional tweet earns them $399, reaching thousands of viewers. This creates a misaligned incentive structure where influencers benefit regardless of how the tokens perform.
The findings serve as a stark warning to cryptocurrency investors about the risks of following influencer recommendations in the volatile memecoin market. The data suggests that most promoted tokens quickly lose value, leaving late investors with substantial losses while promoters profit from the initial hype.