Cryptocurrency advertising by bloggers causes losses for investors

The market analysis conducted by the researchers covers 1,567 tokens. We are talking about coins that were advertised on social networks by 377 influencers. Authors of the work warn that trust in opinion leaders can lead to losses.

CoinWire studied 377 influencers with an audience of 10 thousand or more subscribers who regularly promote memecoins. During the work, 1,567 tokens were analyzed, advertisements for which appeared among bloggers in the last three months. The authors of the study call memcoins “dead” if they have lost 90% of their value since advertising. The researchers collected data on the value of coins through Dune Analytics.

Key Findings of the Study

Here are three key takeaways from CoinWire that are worth paying attention to.

1. 76% of influencers promoted memcoins, which have lost almost all value. Two thirds of advertised tokens (66%) have completely lost value, rendering them financially worthless. Often such projects are actively promoted as short-term investments with high profit potential, but the reality turns out to be different.

2. 86% of tokens lose 90% of their value in three months. On average, memcoins begin to depreciate almost immediately:

• After one week, 80% of them lose 70% of their value.
• After one month, 90% are cheaper by 80%.
• After three months, 86% of coins are completely worthless.

3.Only 3% increased in price 10 times. The opposite picture is observed extremely rarely: only 3% of memcoins show a tenfold increase, and of all influencers, only 1% promoted projects that achieved such a result.

The graph shows the dynamics of falling prices of memcoins advertised by Twitter influencers.
Blue line: share of memcoins with falling prices. After a week it is 80%, after a month – 90%, after three months – 86%.
Red line: average price change. After a week, memcoins lose 70%, after a month – 80%, after three months – 89%.
The chart confirms that most memcoins lose a significant portion of their value in a short period of time. Source: coinwire

Big influencers bring more losses

The analysis showed that the larger the influencer’s audience, the worse the results of their recommendations:

• Influencers with more than 200 thousand followers show the lowest results. The memcoins they promote lose 39% of their value in the first week and 89% in three months.
• Small influencers (less than 50 thousand subscribers) show noticeably better results: after a week their tokens show 25% growth, and after three months – up to 141%.

The graph shows that memcoins from ads from influencers with less than 50 thousand followers grow by an average of 141% over three months, while tokens from large accounts with 200+ thousand followers lose an average of 89%. Source: coinwire

The study’s authors suggested that large influencers are more likely to act for financial gain without analyzing projects. Smaller accounts may be more selective in their recommendations.

Benefits for influencers, not investors

While investors are losing money, influencers are making steady income from advertising. On average, one promoted tweet brings in $399, and each post receives about 15 thousand views.

This financial incentive explains why influencers continue to massively promote dubious projects, despite their harm to followers. This is an easy way for influencers to monetize, while investors lose out.

Conclusions

CoinWire’s research shows that advertising memcoins on Twitter only benefits influencers, but is almost always disastrous for investors. Most of these tokens quickly lose their value. The chances of serious profit for investors who believe advertising are minimal.

Investors should avoid decisions based on promotional tweets and carefully analyze projects before investing. Memcoin advertising is most often a way for influencers to make money, rather than a tool for honestly informing the audience.

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