Significant Declines in Celebrity Meme Coins
Celebrity-endorsed meme coins have witnessed dramatic losses, with some tokens plummeting by over 80% since their all-time highs (ATH). This downturn comes in the wake of indications that investors are now gravitating towards cryptocurrencies that demonstrate tangible real-world value.
Performance of Celebrity Meme Tokens
Data from Messari reveals that well-known tokens like MOTHER, DADDY, TRUMP, MELANIA, and JAILSTOOL have experienced an average drop of 78% since reaching their peak values. The MOTHER and DADDY tokens, tied to Australian rapper Iggy Azalea and social media influencer Andrew Tate respectively, hit their ATHs in June and July 2024 but have since seen declines exceeding 80%. The TRUMP coin has also faced a reduction of more than 60%, while the MELANIA token has suffered similar losses, dipping over 80%. Recently, the TRUMP coin hit a new all-time low, exacerbated by rising geopolitical tensions including a tariff dispute initiated by the U.S. President. Just prior to this drop, the token had already lost 72% of its ATH value. Additionally, a decrease in the coin’s open interest suggests that investor engagement is dwindling, indicating a potential retreat from the market.
Understanding Open Interest in Crypto
Open interest, a key indicator in the cryptocurrency market, reflects the total number of active derivative contracts. A decline in open interest frequently signals that traders are closing their positions, which is often interpreted as a lack of confidence in the asset’s future performance. This pattern indicates that investors are increasingly wary about the TRUMP coin’s outlook.
Challenges Faced by Other Celebrity Tokens
Other tokens linked to celebrities are also encountering difficulties. Ivanka Trump has distanced herself from the IVANKA coin, asserting she has no affiliation with cryptocurrency. Similarly, the JAILSTOOL meme coin has recorded a steep decline.
JAILSTOOL Coin and Its Prominent Backer
Dave Portnoy, the founder of Barstool Sports, significantly boosted the JAILSTOOL meme coin’s visibility. His endorsement led to an extraordinary surge in its market cap, skyrocketing by 100,000% overnight. Despite the overall downturn, Portnoy remains steadfast in his support for the token, stating, “I will continue to root for JAILSTOOL and honor every commitment I made. If it reaches a $200 million market cap again, I’ll invest $100,000 into it. I will not sell a dime until it hits 1 billion. I am still holding it all.”
The Risks of Celebrity-Endorsed Investments
The decline of these celebrity-backed meme coins serves as a reflection of the risks associated with speculative investments. A recent report highlighted that 76% of meme coins promoted by influencers lose over 90% of their value within a three-month period, resulting in significant losses for investors.
Shifting Focus Towards Valuable Tokens
In light of the volatility and risks linked to meme coins, many investors are redirecting their attention towards altcoins that offer concrete real-world applications. Projects centered on decentralized finance (DeFi) and the tokenization of real-world assets (RWA) are becoming increasingly popular. This shift illustrates a growing preference for investments that promise practical utility and long-term viability rather than speculative ventures. DeFi expert Ignas noted, “Innovative technical launches are gaining momentum… It’s not merely about blindly investing in meme coins or celebrity tokens anymore; there’s room to apply analytical and research skills.”
Regulatory Scrutiny and Scams in Celebrity Meme Coins
Recent developments concerning celebrity meme coins have prompted regulatory attention. Senator Elizabeth Warren has called for federal oversight of the TRUMP and MELANIA coins, expressing concerns over potential ethical violations. The hype surrounding the TRUMP meme coin has also attracted fraudulent activities, with scammers reportedly executing a rug pull that defrauded investors of around $857 million. Furthermore, blockchain analysis has revealed that 94% of TRUMP and MELANIA tokens are concentrated within just 40 wallets, suggesting a high degree of centralization and the possibility of market manipulation.
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