The latest fad in the crypto world appears to be fading and it is leaving a trail of heavy losses for those who jumped in believing (or were deceived to believe) that it could be a quick path to riches.

Celebrity-endorsed meme coins hit the market like a crushing wave but appear to have already faded once reaching the shore as many of them have already lost most of their value.

In May 2024, the launch of Caitlyn Jenner’s token, JENNER, prompted many other celebrities to pursue similar endeavors to capitalize on their huge followings. Despite the public’s initial skepticism, Jenner’s token reached a market cap of $40 million in just 24 hours but then succumbed to selling pressure and cratered.

Iggy Azalea, the Australian rapper, followed Jenner on this path and minted a token named MOTHER that also saw its price propelled by fans and investors. Along with her, other rappers came to the space to further monetize their notoriety including Soulja Boy, 50 Cents, and Lil Pump.

Meanwhile, infamous characters like Andrew Tate also tried to fish in troubled waters. In total, an estimated number of 30 celebrity-endorsed tokens were launched in June alone by using the popular Solana-based Pump.fun protocol.

Pump.fun allows creators and crypto enthusiasts to mint meme coins in the Solana blockchain easily and in just a few minutes. They just have to upload an image, select a maximum supply, and choose a name and voilá. Unlike regular meme coins, you don’t need to provide liquidity for swaps on pump.fun, making it extremely cheap to launch a token.

Celebrity Meme Coins Experience Losses of Over 70% in Just a Month

According to statistics compiled by X user Slorg, the average decline of celebrity-endorsed tokens as of 24 July was 94%. The “best performing” token thus far is Andrew Tate’s DADDY meme coin with a 73% loss while the list of tokens that have lost 99.9% of their value is quite long and includes 50 Cent’s GUNIT token and Hulk Hogan’s HULK.

Meanwhile, as of this same date, the market capitalization of 22 out of 30 of these tokens is less than $1 million.

Let’s take a closer look at some specific examples:

  1. Iggy Azalea’s “Mother” token: Launched on May 29, 2024, it reached an all-time high of $0.23 on June 6. Since then, it has plummeted by 72% and is currently trading at around $0.06.
  2. Andrew Tate’s “Daddy” coin: Launched on June 11, it hit an all-time high of $0.28 on June 14. It has since dropped by about 60%, now hovering around $0.11.

The data illustrates the heavy losses that some investors took by exposing their money to these investments.

It also raises ethical questions about the whole trend as these celebrities should be held accountable for not properly disclosing the risks involved in this type of investment and failing to provide details about how their token’s total supply would be distributed. If these celebrities also sold the meme coin while promoting it to their fans, they could be hit with market manipulation charges from the SEC.

In this regard, another X account named bubblemaps tried to determine the percentage of insiders who received a portion of the token’s allocation and found Barron Trump, the son of former president Donald Trump, allocated as much as 67% of the DJT tokens among insiders whose identities are unknown.

Meanwhile, Soulja Boy’s SBOY token also allocated 60% of its supply to people in his inner circle while Doja Cat handed over as much as 75% of her DOJA token to people close to her.

The Role of Pump.fun in the Meme Coin Craze

A key factor in the proliferation of these celebrity meme coins has been the rising popularity of the Solana-based meme coin minting platform Pump.fun. This service allows users to create and launch tokens on the Solana blockchain with minimal effort, funds, and technical knowledge.

In May 2024 alone, nearly half a million Solana-based tokens were launched. Most of these tokens were created by using the Pump.fun platform.

While this protocol has made it easy for users to create new digital assets, it has also contributed to saturating the market and increasing the potential for scams and pump-and-dump schemes.

The rapid rise and fall of celebrity meme coins suggests that they may be a passing fad. This trend follows a pattern seen in previous crypto bull cycles where celebrities hop onto the latest crypto trend, often with disastrous results for investors.

In 2017, it was celebrity-endorsed Initial Coin Offerings (ICOs). Meanwhile, during the 2021-2022 bull market, the focus shifted to non-fungible tokens (NFTs) and the metaverse. Now, in 2024, meme coins have taken center stage. However, the swift decline in interest and value indicates that this trend may be short-lived.

The collapse of these celebrity meme coins has likely resulted in significant financial losses for many investors. While exact figures are difficult to determine, given the 94% average decline from peak values, it’s clear that those who bought at or near the top have lost the majority of their investment.

For example, an investor who put $1,000 into a typical celebrity meme coin at its peak would now be left with just $60. Multiply this across thousands of investors and dozens of coins and the total losses could easily run into millions of dollars.

The Risky Business of Investing in Digital Assets with No Value Proposition

The debacle of celebrity meme coins highlights the risks associated with investing in digital assets that have no practical utility and offer zero value to their holders. The price of these assets is solely determined by the level of hype that their issuers can generate. In the case of celebrity meme coins, they depend highly on their endorsement.

However, in most cases, these tokens were introduced without offering any exclusive perks or privileged access to their holders, which makes them seem like a cash grab more than anything else.

Some of the risks that come with pouring money into celebrity-endorsed digital assets include:

  1. Lack of intrinsic value: Without a clear use case or underlying asset, the value of these tokens is purely speculative.
  2. High volatility: Prices can fluctuate wildly based on social media trends and celebrity interactions via social platforms like X or Instagram.
  3. Potential for market manipulation: The ease of creating these tokens and the influence of celebrity endorsements can result in impersonation and pump-and-dump schemes.
  4. Regulatory uncertainty: As these tokens blur the lines between securities and collectibles, investors may lack legal protections and celebrities could be exposed to legal issues for their involvement.

The Role of Celebrities and Influencers

The involvement of celebrities in promoting these meme coins raises ethical questions and may result in regulatory and legal issues for those who have engaged in these activities. While some may genuinely believe in the projects they endorse, others may have taken advantage of their fame to profit at the expense of their followers.

It’s worth noting that some celebrities have faced legal consequences for promoting fraudulent crypto projects in the past. During the 2017 ICO boom, figures like Paris Hilton, Floyd Mayweather, and Jamie Foxx promoted projects that later failed and some of them faced relatively large fines.

The decline of celebrity meme coins aligns with broader market trends.

Data from CryptoQuant indicates that the dominance of meme coins in the altcoin market has been reducing progressively since mid-May and the decline has continued in June.

When celebrities and influencers rush to endorse or create crypto assets, it often signals a market peak. The involvement of celebrities in the crypto space has historically coincided with the later stages of bull markets and is often followed by significant market corrections.

Lessons Learned from the 2024 Meme Coin Hype

The celebrity meme coin crash offers several important lessons for crypto investors:

  1. Due diligence is crucial: Invest time researching if the digital asset is actually being endorsed by the celebrity or if there is evidence or suspicion that their social media account may have been hacked – as it has happened multiple times lately.
  2. Be wary of celebrity endorsements: A famous name doesn’t guarantee that an investment they endorse will perform positively. The offering must offer the holder something valuable rather than just a collectible item.
  3. Understand the risks: Meme coins and other highly speculative assets in the crypto space can deliver huge losses to unwary investors. Only participate in these offerings with money you can afford to lose.

While the current crop of celebrity meme coins may have rotten, it is highly unlikely that this will be the end of meme coins altogether. The crypto market has shown a persistent appetite for speculative, community-centered tokens.

However, investors may become more discerning, favoring meme coins with stronger communities, clearer use cases, or more innovative features.

However, financial professionals hope that investors will become more cautious and scrutinize these offerings more closely before pouring thousands of dollars into them.