The price of a memecoin inspired by Elon Musk’s artificial intelligence project “Grok” experienced a dramatic 70% drop following allegations from blockchain sleuth ZachXBT that the token’s social media account was recycled from a scam token project.
In a post on Nov. 13, ZachXBT shared screenshots that revealed various social media accounts and websites connected to the Grok (GROK) token had been repurposed from old projects, including an abandoned memecoin project called ANDY, which had significantly declined from its all-time high.
The ripple effect was almost immediate, with GROK plummeting 74% from its all-time high of $0.027 to as low as $0.007 within just five hours of ZachXBT’s post. Although the price has since retraced slightly to $0.011, the damage had been done.
ZachXBT continued to provide evidence to support the allegations, pointing to a transaction on Etherscan showing GROK’s team had sent roughly $1.7 million worth of the token to a burn address in an attempt to reduce supply and restore confidence in the token.
Additionally, the GROK token’s official Twitter account claimed in a post on Nov. 14 that the development team had burned all of the tokens from the deployer address, totaling 180 million GROK and valued roughly at $2 million at that time.
At its peak price of $0.027 on Nov. 13, GROK had a market capitalization of nearly $200 million, making it one of the largest new memecoins in the current cycle. The memecoin was launched on Nov. 5, the same day Elon Musk revealed his supposed competitor to OpenAI’s ChatGPT, Grok AI. Over the following week, its value surged by 33,650% as memecoin traders rushed to capitalize on the hype.
The rapid decline in GROK’s price and market cap serves as a stark reminder of the speculative nature of memecoins and how quickly prices can fluctuate based on the perception and sentiment of social media influencers such as ZachXBT.
The excruciating blow to GROK comes as yet another cautionary tale for those who might be lured into the allure of the memecoin craze without fully considering the risks involved. A rapid and drastic fall from a token’s all-time high can erase significant gains, leaving investors, especially those who bought in at the peak, with substantial losses.
Furthermore, the controversy surrounding GROK indicates the importance of conducting thorough due diligence and research before investing in any digital asset, especially highly speculative assets such as meme-based cryptocurrencies.
For those who might have been caught up in the frenzy of GROK’s meteoric rise without fully understanding the risks involved, this episode serves as a sobering lesson about the perils of jumping into highly speculative assets without a well-thought-out investment strategy.
Ultimately, this rollercoaster ride in the value of GROK is a stark reminder that investing in memecoins and other highly speculative assets requires a high tolerance for risk and a willingness to endure extreme volatility. As the broader cryptocurrency market continues to mature, it’s crucial for investors to remain vigilant and discerning in separating hype from substance.