Written By: Isha Goel | July 22 2021
The volatility of the crypto market has recently been heavily blamed on the influences of social media, and yet another act by influencers led to an illegal ‘pump and dump’ on a new project.
The Problematic Hype
A charity cryptocurrency called Save the Kids was launched on June 5th and promoted with ‘a mission to build a better world for kids’ where a portion of the proceeds would go to charity. The popular esports team FaZe Clan members, each of whom had millions of social media followers, promoted this project and influenced many others around them to place investments in the new crypto as well. After rising to nearly $0.50, the coin’s value quickly plummeted to 60% its value throughout June and the four members involved with the project’s promotion were subsequently suspended upon receiving scamming allegations. In a scheme to boost the price of the coin, the pump and dump affected many retail investors that trusted the esports team. While legal actions have been taken, this event brought up a larger problematic dynamic where the younger generation is far more susceptible to the hype brought upon by influencers.
Credit for Image: Insider
After the crypto market boom in 2020 and early 2021, many new mainstream investors became interested in the more established currencies like Bitcoin and Ethereum as well as alternative coins like Dogecoin as they all skyrocketed in value. As a result, many new cryptocurrencies entered the market and influencers became ambassadors to help them gain more traction. In fact, ‘Kim Kardashian, Floyd Mayweather, and Logan Paul are just a few of the personalities to have promoted altcoins — a catchall term for cryptocurrencies other than bitcoin,’
In the past year alone, the number of cryptocurrencies has doubled to 10,000 but more than $80 million has been lost in crypto-related scams since October 2020 in this booming market. Emma Fletcher, an analyst with the Federal Trade Commission mentioned that ‘with bitcoin’s value soaring in recent months, new investors may be eager to get in on the action’ and ‘all of this plays right into the hands of scammers.’
A Popular but Risky Trend
In the midst of stable coins crashing in the market, altcoins have become a popular trading option after being promoted by influencers. Coins like ‘Dogecoin, Ethereum Max, and SafeMoon, have all grown through popular online followings and the chance of getting rich quickly.’ After a recent shakeout in meme tokens like DOGE, it appears that many investors are exiting their positions and as a result are leaving crypto newcomers more skeptical of their investment decisions. Even so, analysts and traders haven’t been able to agree on whether the retail interest will continue to exist in the less serious part of the market.
Credit for Image: Coindesk
After the price of DOGE shot up by over 500% earlier this year, numerous meme coins were launched subsequently. Arcane Research analyst Vetle Lunde said that the sudden interest in the meme culture worldwide resulted in ‘the [meme token] market becoming oversaturated with pointless meme coins.’ According to TradingView, DOGE is down by 35.3% in July thus far and likely going to close the month at a loss again. Regardless, it’s important that traders continue to remain vigilant and monitor the market as better influences in their investment decisions.
Asarch, Steven. “FaZe Clan Members Suspended Following Allegations That Their Save the Kids Cryptocurrency May Have Been a Scam.” Insider, Insider, 2 July 2021, www.insider.com/faze-clan-save-the-kids-cryptocurrency-scam-controversy-2021-7.
Britton, Bianca. “Inside the ‘Wild West’ of Cryptocurrencies and Social Media Influencers.” NBCNews.com, NBCUniversal News Group, 21 July 2021, www.nbcnews.com/tech/tech-news/wild-west-cryptocurrencies-social-media-influencers-rcna1469.
Shen, Muyao. “Meme Tokens Set for Third Straight Monthly Loss as Retail Traders Flee Dogecoin Copycats.” CoinDesk, CoinDesk, 20 July 2021, www.coindesk.com/meme-tokens-set-for-third-straight-monthly-loss-as-retail-traders-flee-dogecoin-copy-cats.