There has been a carpet bombing of Celebrity memecoins in the current crypto cycle. Hundreds of celebrities have either launched their own memecoin or promoted them using their influence on social media platforms.
Owing to the popularity of these celebrities, many of these memecoins have witnessed a surge in their price, at times providing handsome returns to their investors.
However, not everything is rosy in this celeb-backed charade as many analysts warn investors not to fall into a “pump and dump” trap.
All these celebrity memecoins might seem like a golden opportunity for quick profits but their reality is more often than not, plain disappointing.
A recent viral post related to a celeb blacked coin describes the reality where we can see that many of them entered the crypto industry just to scam people and their followers. In the below image, we can see that most of those popular memecoins have plunged 99% within a few days of its launch.
It also needs to be noted that all celebrities in the list above have millions of followers and promoting memecoins will get mass attention from a wider audience. If not all, even hundreds of them buying the memecoin will push its price up within hours. Let’s further understand how these influencers and celebrities benefit from this and scam people so softly that they do not even realize until it’s too late.
Celebrity Memecoins Modus Operandi
A typical method in this case is deploying the token first and acquiring passive supply first before making it live to the public. Once the team members and insiders buy a significant coin of the total supply, the remaining tokens are inserted in the market as liquidity. When people gets inspired to buy these coins – following the announcement from celebrities – they actually become the “exit-liquidity” who pump prices. After sufficient market cap is achieved, the project team sells-out their holding and leaves investors in the dark.
At first, such memecoins will look promising and provide quick gains in the short term. When you buy the coin and join its community, there will be buzz around NOT-SELLING and holding until it reaches a certain milestone. Meanwhile the project team and all associated influencers and celebrities will gradually sell their holding and secure profits.
Sometimes, celebrities sell their holdings much earlier and still keep their followers engaged with the project by sharing posts on their social media. People think they are still involved in the project but these so-called celebrities have sold their coins earlier. Most celebrities even delete all the posts of such promotion from their social media and walk away like nothing happened.
How Investors Are Allured For Celebrity-Endorsed Memecoins
- Social Media
Celebrities wield enormous influence on platforms like Twitter, Instagram, and TikTok hence a single post about a memecoin can send its price soaring. Their massive following often means that any coin they endorse receives immediate attention and investment.
- Paid Influencer
Collaborations with crypto influencers and traders amplify the reach of these endorsements. This way they create a buzz around a coin and makes it appear more legitimate and attractive to potential investors.
- Fake Events and Giveaways
Fake events or giveaways – where participation are required to buy the promoted memecoin – is another common tactic these scammers use. This strategy drives up demand and creates a sense of urgency among investors.
- Brand Ambassadorships
Some celebrities take on the role of brand ambassadors for specific cryptocurrencies. They attend events, create promotional content, and often become the public face of the coin.
- Paid Promotions
Many of these endorsements are paid promotions with celebrities receiving compensation either in cash or in the form of the promoted coin. They start endorsing the coin by creating a conflict of interest for their followers.
While there are hundreds of scam cryptocurrency and memcoins, its essential for investors to avoid such traps and protect their funds. Before investing in any cryptocurrency – especially those endorsed by celebrities, it’s recommended to conduct a thorough research. If the coin does not have any fundamental value, investors must understand that its price actions will be impacted by other people’s buying and selling.
Protect Yourself: Pre-Scam Recommendations
Do Not Follow Hype
Do not make investment decisions based on hype shown on social media. All those bull-posting and promising sentiment for memecoins is mostly fake. It is generated artificially just to spread FOMO among investors. Hype can be misleading and it does not necessarily reflect the coin’s actual value or potential.
Exit Early
If you have invested in such memecoins, consider exiting earlier with profits rather than waiting for it to reach sky-high. “Some-profit” is always better than “no-profit” and sometimes investors even lose all their capital while waiting for they coin price hitting its target.
Avoid Investing in Zero Value Crypto Assets
Most of the memecoins are community-backed and it doesn’t have any value-accruing. If the fundamental value of the project is zero then it needs to be avoided. It can be found by simply looking at the project’s website. Instead, look for established projects and consider investing in well-known cryptocurrencies with a proven track record.
Conclusion
The crypto industry is full of potentials as well as scams all around. By understanding the tactics used to promote such fake crypto projects, you can make more informed decisions and protect your investments. Always approach such investments with caution, conduct thorough research, and avoid making decisions based solely on celebrity endorsements. Not every celebrity is your friend and they only endorse projects because they are paid for it.
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