Bitcoin has just achieved a remarkable milestone by reaching $100,000. This significant surge in value has been largely influenced by former President Donald Trump’s reelection and the expectations of a pro-cryptocurrency administration, which has ignited enthusiasm among crypto investors. As the price of Bitcoin climbs to new heights, the world of cryptocurrency is beginning to re-enter public awareness after the substantial crashes that marked 2022.

In addition to Bitcoin’s impressive performance, the memecoin trend is experiencing a revival. Coinciding with Bitcoin’s rise, the internet sensation “Hawk Tuah” girl, Hailey Welch, has made headlines by launching her own cryptocurrency token, $HAWK. This development has caught the attention of many in the crypto community.

Upon its launch, the $HAWK token skyrocketed to a market cap of $500 million, only to witness a dramatic crash within minutes. Currently, its market cap has dwindled to approximately $36 million, leaving many Hawk Tuah enthusiasts devastated as they took to social media to express their losses, with some reporting thousands of dollars lost in this volatile market.

As we observe these patterns, it is beginning to feel reminiscent of the crypto landscape in 2021, where rapid fluctuations and unpredictable trends were commonplace. The nostalgia for the previous boom raises questions about the sustainability of these recent market movements.

Understanding the Risks of Celebrity-Endorsed Cryptocurrencies

During the previous crypto boom of 2021, numerous celebrities and online influencers recognized the lucrative potential of the cryptocurrency market. Various musicians, reality TV personalities, and e-sports figures chose to endorse alternative coins or even launched their own branded memecoins, tapping into their fanbases to generate interest and investment.

Investing in cryptocurrency is inherently risky. Crypto tokens are known for their high volatility and speculative nature. The current landscape is characterized by minimal governmental oversight or regulation, which adds to the uncertainty. Even Bitcoin, often regarded as the safest option within the crypto realm, has experienced significant fluctuations. Investors who find themselves in a position to sell during downturns can suffer substantial financial losses.

Moreover, the barrier to creating a cryptocurrency token has significantly diminished over recent years. With the advent of user-friendly platforms, anyone can launch a token with relative ease. The phenomenal success of Dogecoin, the most recognized memecoin, set a benchmark that few others have managed to achieve. This has encouraged many aspiring investors to enter the market with hopes of striking it rich.

However, the enticing promise of quick wealth through crypto tokens and memecoins has lured significant investments from individuals seeking financial freedom. Back in 2021, many memecoins backed by celebrities and influencers gained widespread popularity. Unfortunately, as reported by Mashable, a considerable number of these ventures turned out to be fraudulent.

Rug pulls—a common occurrence in the world of memecoins, particularly those associated with celebrities and influencers—have left many investors disillusioned. The typical scenario involves a well-known figure launching a memecoin, encouraging their fans to invest in hopes of financial gain. Prior to the public launch, however, the creator often secures a substantial amount of tokens for themselves or their associates, either distributing them freely or offering them at a discounted rate to select buyers.

When the token finally launches, public interest drives up the value, but those who received early tokens cash out, causing the price to plummet and leaving fans with worthless investments. The unfortunate reality is that many of these supporters find themselves trapped, unable to sell their now-devalued tokens.

It may seem intuitive to avoid financial guidance from celebrities, yet the allure of their endorsements often clouds judgment. Back in 2018, the Securities and Exchange Commission issued a critical warning regarding the speculative behavior associated with public figures. “Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” stated Steven Peikin, Co-Director of the Enforcement Division. He emphasized the need for caution, especially in light of the charges against figures like Floyd Mayweather Jr. and DJ Khaled for promoting unregistered initial coin offerings.

In an era where parasocial relationships are prevalent, many fans feel a sense of trust towards their favorite influencers, often believing they would not engage in deceitful practices. However, history has shown that celebrity-backed memecoins frequently result in disappointment, with insiders benefiting at the expense of devoted followers.

Tweet may have been deleted

Consider the recent launch of $HAWK. In a X Spaces stream, YouTuber Coffeezilla, known for investigating cryptocurrency scams, confronted Welch and her team regarding the aftermath of the token’s launch. The narrative is all too familiar: a significant portion of the tokens was concentrated in a few wallets before the public launch. Following the launch, insiders sold off their holdings, causing the value of $HAWK to plummet. Buyers who entered at launch now face considerable financial losses.

Unfortunately, those who invested in memecoins like $HAWK have no recourse. There are no refunds or pathways to recover their investments. With most memecoins lacking inherent utility, the only hope for these investors lies in the ability of Welch and her team to lure in another group of unsuspecting buyers, perpetuating a cycle of deception.

After reflecting on these insights, we hope you can navigate the crypto landscape more wisely and avoid becoming a victim of these schemes.