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Celebrities (including influencers) have significant clout in today’s world. By making daily updates on their social media platforms, they keep their followers informed about their activities. Followers tend to fall into two categories, casual followers who love the celebrity’s style and genuinely respect them, and avid followers who may fully believe or hang on to everything the influencer says and does.
From pro athletes to seasoned actors and actresses, celebrities are often seen on various social platforms promoting a wide variety of services. Another category of celebrities is professional investors with experience trading cryptocurrency (crypto), stocks, and other investments.
Celebrity Influence On Cryptocurrency
- These celebrities excel in their chosen careers or fields of practice, making them promoters of various brands, products, and trends. One of these trends, so to speak, is crypto. Celebrities endorsements have made crypto very popular with the investing public in general.
- Crypto is purchased and sold just like stocks and bonds. Celebrities and social media influencers drive consumer behavior and, in turn, earnings. The available earnings determine the price or value of crypto. Therefore, celebrities drive crypto prices and value. Celebrities promoting crypto means that some of the most influential people worldwide advise their millions of followers to embrace or adopt cryptocurrency.
- Increased adoption of crypto and other blockchain products and services equals increases in the price trajectory of cryptocurrencies.
- As long as this adoption continues to rise, the prices of crypto will do the same. Through the aid of celebrities, who keep promoting crypto, the adoption is practically soaring.
So, What Are The Implications?
Regardless of the influencer backing, many of these crypto-assets have faltered. Like anyone else, Celebrities can be deceived into being part of or making promotions for questionable investments. But unlike most people, these celebrities are usually in a better financial position to bear the risks and potential losses. Just because a celebrity is endorsing a cryptocurrency, it doesn’t mean that investing in that particular cryptocurrency will benefit all investors.
There are a few questions to be asked.
Are The Celebrities Participating In Insider Trading?
They may plan to promote crypto because they know it will falter soon. Their promotion of the product raises its value to an artificial price. They immediately sell it for a profit before the coin’s value plummets. Insider trading is unethical and illegal as it gives the insider a very unfair advantage in the market.
What If Celebrities Are Trying To Purchase Crypto At A Low Price?
They discourage their followers from buying crypto so that the price falls, and they can buy more at a lower rate.
What If The Celebrities Are Not Disclosing Sponsorship?
They may be sponsored and have compensation for promoting the crypto and share that with their followers.
Celebrity endorsements attract investors (both traditional and non-traditional). What happens when the celebrity uses influential platforms to push the market in their favor to the detriment of other investors?
Regulations
In 2011, 50 Cent, a rapper and celebrity with over 20 million followers on Twitter, encouraged his followers to buy shares trading under the HNHI stock. The price went from 17 cents to 39 cents, causing the Securities and Exchange Commission (SEC) to investigate. 50 Cent deleted the original tweets. The rapper became less bullish about his opinions regarding HNHI. He also advised his followers to talk to a financial advisor if they needed information about the HNHI stock.
According to the SEC (the regulators), it is illegal for celebrities to make endorsements of crypto if they have not disclosed to their followers (or fan base) exactly how they would benefit from the publicity.
The wrath of regulators has fallen on a portion of celebrities that have endorsed crypto and other projects. The primary target of the regulators is undisclosed compensation. The SEC ruled that any influencer who endorses a cryptocurrency must disclose any compensation received in exchange for promotion.
In 2011, 50 Cent, a rapper and celebrity with over 20 million followers on Twitter, encouraged his followers to buy shares trading under the HNHI stock. The price went from 17 cents to 39 cents, causing the Securities and Exchange Commission (SEC) to investigate. 50 Cent deleted the original tweets. The rapper became less bullish about his opinions regarding HNHI. He also advised his followers to talk to a financial advisor if they needed information about the HNHI stock.
According to the SEC (the regulators), it is illegal for celebrities to make endorsements of crypto if they have not disclosed to their followers (or fan base) exactly how they would benefit from the publicity.
The wrath of regulators has fallen on a portion of celebrities that have endorsed crypto and other projects. The primary target of the regulators is undisclosed compensation. The SEC ruled that any influencer who endorses a cryptocurrency must disclose any compensation received in exchange for promotion.
Conclusion
Investors should do their research and be more discerning when investing. Just because a famous person promoted it doesn’t mean it is a good investment. Celebrity endorsements of crypto should be met with skepticism and never make investments based on information received through media alone.
Celebrities promoting crypto have an ethical responsibility to their followers as they could have a lasting effect on the livelihoods of their followers. Celebrities should be careful and accurate in describing what they are endorsing, whether crypto or any other investment.
If you want to learn more about cryptocurrencies, download the 2021 Cryptocurrency Investment For Free: https://bit.ly/3yzMetg
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