Crypto advice today is based primarily on social media. Influencers share daily “exclusive picks” and promise large returns, but they can be costly if followed without due diligence. A person who has 100,000 followers on X (formerly Twitter) shares the next great token. The person’s post gets thousands of likes and comments from others who appear to support it as legitimate. However, no one sees the money paid to the influencer or the tokens they bought early.
The crypto space is an arena of hype and FOMO, and influencers have learned to capitalize on both. Many of these influencers benefit financially from the purchase of a token they already hold. Not everyone who influences others is dishonest, of course. Some are honest and ethical, but distinguishing between those who truly believe in a product and those who are making money from a purchase is challenging.
The Business Model Behind Crypto Promotion
Influencers are making money off bad projects. There is a large amount of money available for an influencer to promote a project, and therefore, most will agree to do so even if it does not make sense for them to invest in it themselves. An influencer who earns $500 per post will likely take as many projects as they can get. Therefore, an influencer becomes more of a paid advertiser than a trusted advisor. In fact, there is a significant difference between paid advertising (which clearly states who is paying for the ad) and paid promotions in cryptocurrency (which do not state who is paying for the promotion).
Many project teams try to get influencers to promote their projects by offering them tokens at a discount or for free. Then the influencer promotes the project on social media, raising awareness and increasing the token’s value. After enough people buy into the project (due to the promotion), the influencer sells their tokens at a higher price and makes a profit. This pattern repeats frequently, leading regular investors to hold worthless tokens.
Finding Legitimate Presale Opportunities
The crypto market constantly introduces new projects, and many enter through presale phases, offering tokens to early investors before listing on major exchanges. These opportunities can provide real value when you identify projects with strong fundamentals and experienced teams. During the presale crypto stage, investors who do their homework can secure positions in promising projects at favorable entry points.
Several criteria define successful quality pre-sale offerings. Successful quality presale offerings are typically led by open, verifiable, and established development teams (in both the technology and finance industries) who understand the issues at hand and their solutions, as described in the clear, concise, and readable white papers produced for the presale. The presale roadmaps provided show realistic timelines and schedules for implementation. The tokenomics offered should be balanced and not heavily favor insider stakeholders. When these qualities are present, it may be possible to participate in a legitimate pre-sale and buy tokens before the public sale date.
However, many pre-sale promoters will market every project they are paid to promote, regardless of whether it has merit or is likely to generate a profit for investors. Promoters will highlight and stress the potential earnings from a specific pre-sale project. Still, they often overlook the major differences between a reputable pre-sale and a cash grab pre-sale. So it’s your task to evaluate each pre-sale project’s strengths and determine whether it offers genuine utility, has a skilled team, and features sensible tokenomics. Simply put, not all pre-sale projects deserve your money. However, avoiding all pre-sale projects might cause you to miss out on a legitimate opportunity that could yield significant financial returns once it is successfully developed and launched.
The Volume Problem and Lack of Depth
The sheer number of projects you’re asked to analyze leaves little time to actually do quality analysis on those projects. Reading a project’s whitepaper is no small task, researching its tokenomics is not easy, exploring the background of the team behind the project adds another layer of work, and comparing your new project to competitors in the market introduces yet another level of complexity.
Many influencers are promoting numerous different projects at the same time. Given the number of projects they are promoting, there simply isn’t enough time for them to be genuinely knowledgeable about them, so that should be a red flag signalling that they might be shilling. They easily become a mouthpiece for whoever pays them, rather than a thoughtful analyst providing good information to the people who follow them.
A real supporter of a project takes the time to educate themselves on the project they are supporting, communicates with the community, asks difficult questions, and points out the project’s positives and negatives. In contrast, the influencer who is only motivated by money jumps from project to project very quickly.
Finding Trustworthy Voices In the Noise
There are some cryptocurrency influencers worth trusting. Some have the highest levels of integrity and offer true value to their audience, and they represent themselves honestly, transparently, and consistently throughout their content. And that is what makes them stand out.
Reliable influencers always declare when they have been paid to promote an idea, product, or service. If they are working on a particular project, they will clearly indicate whether the company paid for the post so that you can make a decision based on their perspective. This way, you will know if they were compensated, so you can view their opinion in the correct context.
In addition, honest influencers will not make claims about future profits because they understand that all investments involve risk and that markets move quickly, especially in cryptocurrency. They will present views and ideas that are fair and balanced, considering both the potential to profit and the potential to lose money. Furthermore, they will never use terms such as “guaranteed profits” nor will they create a false sense of urgency among their followers.
Setting Your Investment Objectives and Managing Your Exposure to Risk
You need to be careful about the level of risk you’re taking on when making smart investment choices. In all investing, there’s a very basic rule: never invest more than you can afford to lose. Before investing in cryptocurrency, keep 6-12 months’ worth of living expenses in liquid savings.
Diversifying your investments is another way to protect yourself from financial loss. Do not place your entire portfolio in a single asset, regardless of how enticing the opportunity may seem. By spreading your investments across many assets, you can mitigate losses if one asset fails.
Your expectations regarding potential returns on investments should be reasonable. Many people have made a great deal of money in cryptocurrencies, but for every person who has succeeded, hundreds have lost money. Projects that truly develop into successful ventures rarely generate returns immediately. It typically takes years to create true equity value. Therefore, anyone who claims they can get you rich quickly is lying or delusional.
The Bottom Line
Crypto Influencers can add significant value, but most should be viewed with big scepticism. Financial incentives are driving most content from crypto influencers, which is in direct opposition to your best interest as an investor, and the majority of them have no qualms about promoting a project just for payment, with very little care as to whether the project is legitimate.
Developing the ability to identify red flags and locate the few who are genuine will protect your capital and help you achieve better investment results. Your biggest asset in crypto investing is not listening to the loudest voices on social media. It’s developing your own analytical skills and making informed decisions based on facts, not hype.