Bitcoin just reached a landmark value of $100,000. The re-election of Donald Trump and his pro-cryptocurrency stance has encouraged cryptocurrency enthusiasts to invest heavily in this digital asset. The resurgence of Bitcoin’s popularity is evident in its rising value, especially after the cryptocurrency crashes of 2022. In addition, meme-inspired coins are also making a comeback.

Notably, on the day Bitcoin recorded its new six-figure high, Hailey Welch, famously known as the “Hawk Tuah” girl, launched her own cryptocurrency token, $HAWK.

The $HAWK token made a splash upon its introduction, reaching a market cap of $500 million. However, within minutes, the token value plummeted. Its current market cap is around $36 million, causing a stir among Hawk Tuah enthusiasts who reportedly lost thousands of dollars.

Looking at the current state of affairs, it seems like a replay of the 2021 scenario.

The Dark Side of Celebrity-endorsed Cryptos

During the crypto frenzy of 2021, many celebrities and internet influencers saw the potential to make money. Several musicians, reality TV stars, and e-sports personalities endorsed alternative coins or even launched their own meme-inspired coins.

However, investing in cryptocurrency is inherently risky. Crypto tokens are extremely volatile and speculative assets. The crypto market currently lacks significant governmental oversight or regulation. Even Bitcoin, considered the most “secure” bet in the crypto world, has experienced drastic price fluctuations. Selling during a downswing could lead to substantial losses.

In recent years, crypto token creation has become accessible to anyone, thanks to platforms that have simplified the process. Dogecoin, arguably the most well-known memecoin, set a high bar of success that other memecoins struggle to match.

The temptation of quick and easy money has lured many people into investing in crypto tokens and memecoins. In 2021, memecoins created by celebrities and influencers were the talk of the town. However, as reported by Mashable, several of these turned out to be scams.

Fraudulent practices, particularly those involving memecoins created by influencers and celebrities, are alarmingly common. The usual pattern involves a high-profile individual launching a memecoin and encouraging their fans to invest. However, before the official launch, the creators usually reserve a number of tokens for themselves or their acquaintances. When the token goes public, the pre-launch holders sell their tokens for profit, causing its value to plummet and leaving the fans with worthless tokens.

It is important to remember that celebrities are not financial advisors. The Securities and Exchange Commission has previously warned investors about the speculative nature of celebrity-endorsed investments. Yet, many fans trust their favorite influencers, often leading to financial losses when celebrity-backed memecoins fail.

Consider the recent case of $HAWK. YouTuber Coffeezilla, known for investigating cryptocurrency scams, questioned Welch and her development team about the token’s performance post-launch. It was revealed that the majority of the tokens were held by a few wallets prior to the public launch. After the launch, these insiders sold their holdings, causing $HAWK’s value to crash and leaving early buyers with significant financial losses.

Unfortunately, there is no way for these memecoin buyers to recoup their losses. Most memecoins lack practical use, leaving holders with tokens that have no value unless another round of investors can be convinced to invest in the token.

Remember, always do thorough research before investing in such volatile assets.