Bitcoin just hit $100,000.
Buoyed by Donald Trump’s re-election and the promise of a pro-cryptocurrency administration, crypto investors are going all-in on digital currency. With the price of Bitcoin rising, the cryptocurrency appears to be re-emerging into the public consciousness after cryptocurrency. crash of 2022.
And it seems that the memecoin trend is also experiencing a resurgence at the moment. Same Day Bitcoin Hit Its New Six-Figure High, Viral Girl “Hawk Tuah” Hailey Welch spear its own cryptocurrency token $HAWK.
Upon launch, $HAWK reached a market capitalization of $500 million. In a few minutes, the the token crashed. Its current market capitalization is around $36 million. Hawk Tuah fans quickly took to social media to share how they lost thousands of dollars.
Things are starting to feel like 2021 again.
Celebrity crypto is a scam
During the final crypto rush of 2021some celebrities and online influencers quickly realized there was money to be made. Some musicians, reality TV stars and e-sports names have endorsed altcoins or even created their own memecoins.
Cryptocurrency is already a risky investment. Crypto tokens are a highly volatile speculative asset. There is currently very little government oversight or regulation when it comes to the crypto market. Even Bitcoin, considered the “safest” bet in the crypto world, has seen significant ebbs and flows. If you have to sell during one of the slow periods, you risk losing a lot of the change.
Crushable speed of light
Additionally, anyone can now create a crypto token. In recent years, platforms have helped make the process very simple. Dogecoin, by far the most popular memecoin, has set a standard of success that no other memecoin has been able to replicate.
Still, the lure of making easy money and getting rich quick through crypto tokens and memecoins has attracted a lot of people’s money.
In 2021, memecoins created by celebrities and influencers were all the rage. Like Mashable reported thenmany turned out to be scam.
Rug draws are quite common with memecoins, especially those created by influencers and celebrities.
Here’s what often happens: a famous or notable individual launches a memecoin. Their fans are encouraged to purchase to support their favorite creator while making money for themselves. However, before the official launch of the memecoin, the creator of the memecoin sets aside a certain number of tokens for himself or his friends. They either distribute them freely or offer an unannounced pre-launch sale at a price much lower than the price the token will launch at launch. When the token goes on sale, the public buys, causing the value of the memecoin to rise. But as soon as this happens, those who received coins during the pre-launch abandon their holdings for profit, causing their value to plummet and ultimately causing the memecoin to collapse. Fans of the celebrity or influencer are then often left holding the bag, their money tied up in a now worthless token that they will never be able to sell.
It may seem obvious that you shouldn’t accept financial advice from celebrities. In 2018, the Securities and Exchange Commission issued a stark warning regarding the speculative machinations of public figures. “Investors should be wary of investment advice posted on social media platforms and should not make decisions based on celebrity endorsements,” wrote Steven Peikin, co-director of the Enforcement Division. statement announcing that Floyd Mayweather Jr. and DJ Khaled have been charged by illegally touting initial coin offerings. “Social media influencers are often paid promoters, not investment professionals, and the securities they tout, whether issued using traditional certificates or on blockchain, could be frauds .”
However, in an age where relationships are parasocial, many fans feel like they can trust their favorite influencers. There is a feeling that “they won’t rip me off.” But, again and again, celebrity memecoins failedinsiders making money from the influencer’s fans.
The tweet may have been deleted
Take the aforementioned and recently launched $HAWK. In a Flow X SpacesYouTuber Coffeezilla who investigates cryptocurrency scams confronts Welch and the developers behind his crypto token about how things went after launch. It’s a story we’ve heard before. The vast majority of tokens were held by a few crypto wallets before the public launch. After its launch, according to Coffeezilla, these insiders abandoned the token. The value of $HAWK has plummeted and all buyers who participated in the launch are left with a significant financial loss.
There is no recourse for these memecoin buyers. There is no refund, no way for them to get their money back. Most memecoins have no use, so there are no use cases for tokens either. The only way they will get back what they invested is if Welch and his team can convince another group of assholes to invest their money in this worthless token.
I hope after reading this you won’t be one of those idiots.