Don’t put your savings in meme coins

The Hawk Tuah girl, a young woman famous for a viral video in which she tawdrily describes a sex act, launched a meme coin this week — because of course she did. It instantly lost over 90 percent of its value. This, too, comes as no shock. But out of ignorance, stupidity and greed, many people put their real money into $Hawk and lost it all.

And so, 2024 ends with assassinations in the middle of New York City, attempted coups in South Korea and @jiggadrin_ tweeting out that his $35,000 in “$Hawk is now $2,000 after ten minutes of buying,” and that “I am a huge fan of Hawk Tuah but you took my life savings.”

In some replies, he tried to spin this as a joke post. But it appears he genuinely lost the money, as did many others.

In case it wasn’t abundantly clear: you should never put your money in random meme coins, particularly not amounts of money you cannot afford to lose, because you will definitely lose it.

To be clear, this advice isn’t true for all crypto projects. Though speculation is responsible for most of the value of Bitcoin, Ethereum, Solana and other level-one cryptos, they do at least have some underlying function (financially and technologically), are secure and have a limited quantity. There can only ever be 21 million Bitcoins; that’s it.

And if made well, creator coins — cryptocurrencies attached to a prominent social media influencer — could have some underlying value to them too. A creator’s coin or NFT could function like both a Patreon tier, an all-access card for their in-person events and a share in their success — and as they grow in influence, their coins would get more valuable. But there are no actual examples of this.

Instead, shitcoins run on fear of missing out and greed. At their best, coins like $MOODENG operate on a GameStop logic: that the underlying asset is funny, and people want to buy funny things, making it valuable, and if you keep holding and don’t sell, the price will rise. These tend to implode eventually, as some plurality of users sell their coins, hoping to get out before a price collapses —in turn causing a price collapse — but if a coin manages to last a while, they can keep floating along on hopium. Doge is the pinnacle example here, with the target of Doge hitting “even just one dollar a coin” being a constant delusional aspiration, and, “it could become more valuable than Bitcoin, who knows?”

Except, that’s impossible, as Doge has an infinite supply — minting roughly 5 billion new coins per year — and were it the same price as Bitcoin, with the current pool, Doge would be worth over thirty times more than all wealth on earth combined, or almost 140 times the world’s annual GDP. But people don’t know that, or don’t believe that, so keep buying in.

Instead, most memecoins — seemingly including $Hawk — are pump-and-dump schemes. They pretend to be long-term projects, with the creators marketing them all over their social media feeds, but the creators assign themselves the vast majority of the supply in pre-sale, making only a small percentage available for the public. When the coin goes on sale, people rush to buy them, hoping to get in early, and because of the artificially restricted supply, the price runs up and up. When the price is sky-high, the creators then rapidly sell their coins, taking all the money bought into the project, sending the value of the coins into the floor. This creates a “hockey stick graph” — because of the increase and decrease in price — and it’s a very familiar sight in crypto.

In the case of $Hawk, it might not be that Hawk Tuah girl herself robbed her fans, but that she was the face of a project so incompetently and greedily ran that they facilitated others doing so. According to work by blockchain analysis Bubblemaps, her team pre-sold a vast majority of the coin, and those who bought in early sold them all off as soon as the price hiked; not only did the Hawk Tuah team earn millions from the pre-sale, but they also earned a 15 percent fee on every $Hawk transaction, minting millions more.

If you invested in Logan Paul’s crypto project, you lost your money, as you did if you invested in Lana Rhoades’s crypto project, Caitlyn Jenner’s or the coin that Kim Kardashian recommended — not to mention any number of other random coins named after dumb, temporary internet memes. You aren’t the next Warren Buffett, $RNT isn’t the future of finance and you’re not getting rich quick. These schemes are designed to sell you dreams and steal your wallet — and they tend to work.