An informal group of self-styled cryptocurrency advisors are using TikTok, Discord and other online platforms to reach nascent crypto investors.
5 min
On March 22, 2020, the day before the United Kingdom announced its first Covid-19 lockdown, Joel Davies joined TikTok, excited by the buzz surrounding it. He was unaware that doing so would lead him toward life-changing money. Davies, 23, had been interested in cryptocurrency since the age of 16, but apart from a small investment in Bitcoin, his curiosity remained on the back burner while he finished his studies in film, television and digital production at Bath Spa University. After graduating in 2019, Davies moved back into his parents’ house in South Wales, stacked savings from his marketing job and, in the evenings, logged on to a Discord server, a communication platform he discovered through Dennis Liu, 26, a leading crypto influencer on TikTok, who also goes by the name VirtualBacon.
“When I found VirtualBacon on TikTok, that spurred me more into investing and learning about [cryptocurrency],” says Davies. Liu’s down-to-earth style and emphasis on research and analysis stood out to Davies in a space that he saw as rife with shilling, scams and hyperbolic price targets. Aided by VirtualBacon’s Discord community and TikTok videos, Davies learned the basics of investing in crypto, including how to trade on centralized exchanges and create a digital wallet, then more advanced skills, such as how to analyze tokenomics and assess the fundamentals of a company. He made his first crypto investment a month into the U.K. lockdown. Over the course of a year, Davies says he transformed his initial investment of 2,500 GBP into nearly 100,000 GBP (about $3,548 into nearly $141,930).
Perhaps no other market is more susceptible to social media’s influence than cryptocurrency, where, for instance, a single tweet from Elon Musk can pump Dogecoin, a meme currency, to all-time highs or send Bitcoin spiralling. One TikTok user created a coin called SCAM (“Simple Cool Automatic Money”) as a joke and it grew to a $70 million market cap an hour after its release. It is currently at an approximately $850,000 market cap.
Newer, self-directed investors are more likely to put their money in riskier investments like cryptocurrency, in part because of the thrill, novelty and social cachet, according to a study commissioned by U.K. watchdog Financial Conduct Authority. Much of cryptocurrency’s buzz, the study found, is due to influencers and hype on social media. An informal coterie of crypto enthusiasts has recently flocked to TikTok because it represents the greatest potential to expand their audience, says Liu. And the audiences they are reaching likely skew young, according to an April survey from Pew Research Center that shows 48 percent of adults under age 30 say they use TikTok, compared to just 22 per cent of those ages 30 to 49. Scams—like meme economies in which online memes are treated like financial commodities and vice versa as well as pump-and-dump schemes—also run rife, according to some influencers on the platform.
“When I started doing crypto [videos] on TikTok, nobody was doing them,” Liu says. Liu’s first foray into crypto was mining Dogecoin—using computers to solve complex mathematical problems in order to introduce new coins into circulation—from his McGill University dorm room in 2014. In 2017, he had some extra cash he wanted to invest and crypto was what he knew best. “It’s a more risky playing field, but, in a weird way, that’s kind of more fair for someone that’s new—a younger audience,” he says. Liu’s most popular TikTok videos are timely analyses, he says, of major price shifts in Bitcoin and Ether, especially when they dip, and other highly traded crypto assets. “People on TikTok are often very new investors, so those types of videos do well,” he says. “It’s not just analysis, but a bit of reassurance to calm their minds in the volatile crypto market.” In his videos, his straightforward delivery, talking over a green screen that displays a coin’s chart or other information, is now a popular format on crypto TikTok.
CryptoWendyO, the TikTok username of a person who says she is a woman in her 30s and declined to give her real name, saying that she has experienced online harassment, makes four to eight TikTok videos a day, analyzing Bitcoin’s price movement, responding to questions in the comments or rounding up the top three daily news stories in crypto. Her most-watched video has over 500,000 views and details a simple investment strategy known as the “moon bag.” “The moon bag strategy is you pull out your initial investment once you’re in profit, and then you take your initial investment and roll it into another project,” she says. “Rinse and repeat.”
CryptoWendyO says she didn’t take TikTok seriously at first but was won over after Ben Armstrong, who goes by BitBoy Crypto, among the most popular crypto accounts with over 2.6 million TikTok followers, encouraged her to join. “TikTok is a great platform to get a large amount of information in a very short amount of time,” says CryptoWendyO. “I can get a lot more on a TikTok video than I can on a Twitter [thread], and more people are going to watch the TikTok.”
Lucas Dimos, 20, known on TikTok as TheBlockchainBoy, says he first heard of Bitcoin from his mom in 2017. “I came for the money, but I stayed for the tech,” he says, echoing a common refrain on crypto social media. Later, he started his own blockchain company, CryptoKnight, to develop an algorithmic trading bot and today runs a Discord server by the same name. Dimos joined TikTok on January 27, 2021 in the heat of the GameStop short squeeze. Since then, he has gained more than 210,000 followers.
A study by Paxful, a cryptocurrency trading platform, analyzed more than 1,200 videos from TikTok finance influencers and determined that one in seven videos misleads viewers by encouraging them to make investments without making clear the content is not meant to be taken as professional financial advice. The study did not conclude whether or not the videos intended to mislead. Dimos describes what he sees as an ecosystem of undisclosed paid promotions. “Developers will go to the influencer and say, ‘We want to give you $3,000 worth of this token—make a video, hype it up and then you can sell for a massive profit,’” he says. (Dimos and CryptoWendyO say they disclose all of the sponsors in their videos, per TikTok’s community standards. Liu did not respond to a request for comment about compensation and sponsorship.)
TikTok declined to comment for this article. Its community guidelines state, in part: “We remove content that deceives people in order to gain an unlawful financial or personal advantage, including schemes to defraud individuals or steal assets.”
Dimos and CryptoWendyO stay away from meme coins, which tend to be online jokes that are turned into cryptocurrencies, like Dogecoin. “By the time the videos circle TikTok’s algorithm, the coin is already pumped and dumped,” says CryptoWendyO. This happened on May 12 with Shiba Inu, a meme coin, which the coin’s website has nicknamed the “Dogecoin killer.” In part thanks to viral TikTok videos targeting investor FOMO—“fear of missing out”—in the wake of Dogecoin’s parabolic rise, $SHIB rocketed in price, increasing 25-fold within the beginning of May, until an approximately $1 billion sell-off by Ethereum co-founder Vitalik Buterin, which he said was a donation to help fight Covid-19 in India, caused $SHIB and several other meme coins to plummet.
Dimos believes all the scamming—what insiders call “rug pulling”—that happens on TikTok in particular, not only takes advantage of new, vulnerable investors, but also tarnishes the image of cryptocurrency. “Every meme coin that exists today feels like a spit in the face to people like me who’ve worked for the professional blockchain industry,” he says.
After becoming an early and active member of VirtualBacon’s Discord server, which has over 20,000 members today, Davies recently joined VirtualBacon in an official capacity, serving as the content marketing lead for BaconDAO, or “decentralized autonomous organization.” Led by Liu, a community of expert contributors shares daily market analysis, picks for low-market-cap “gems” and other insights, while the community can vote on what topics Liu will cover in his TikTok videos, ask questions and chat about their trades. Although it’s not yet publicly listed, those who purchase and hold the $BACON currency will gain access to BaconDAO exclusive content.
TikTok has exposed a class of new investors to cryptocurrency, but for crypto influencers it is now becoming a feeder channel for other online platforms, like the BaconDAO community and Patreon, where many influencers monetize their Discord channels by charging for access. Young crypto investors seem to be particularly mercurial. In March 2021, one year and six figures later, Davies became bored by TikTok and deleted it.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 21, 2021.
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Multinationals like Starbucks and Marriott are taking a hard look at their Chinese operations—and tempering their outlooks.
4 min
For years, global companies showcased their Chinese operations as a source of robust growth. A burgeoning middle class, a stream of people moving to cities, and the creation of new services to cater to them—along with the promise of the further opening of the world’s second-largest economy—drew companies eager to tap into the action.
Then Covid hit, isolating China from much of the world. Chinese leader Xi Jinping tightened control of the economy, and U.S.-China relations hit a nadir. After decades of rapid growth, China’s economy is stuck in a rut, with increasing concerns about what will drive the next phase of its growth.
Though Chinese officials have acknowledged the sputtering economy, they have been reluctant to take more than incremental steps to reverse the trend. Making matters worse, government crackdowns on internet companies and measures to burst the country’s property bubble left households and businesses scarred.
Now, multinational companies are taking a hard look at their Chinese operations and tempering their outlooks. Marriott International narrowed its global revenue per available room growth rate to 3% to 4%, citing continued weakness in China and expectations that demand could weaken further in the third quarter. Paris-based Kering , home to brands Gucci and Saint Laurent, posted a 22% decline in sales in the Asia-Pacific region, excluding Japan, in the first half amid weaker demand in Greater China, which includes Hong Kong and Macau.
Pricing pressure and deflation were common themes in quarterly results. Starbucks , which helped build a coffee culture in China over the past 25 years, described it as one of its most notable international challenges as it posted a 14% decline in sales from that business. As Chinese consumers reconsidered whether to spend money on Starbucks lattes, competitors such as Luckin Coffee increased pressure on the Seattle company. Starbucks executives said in their quarterly earnings call that “unprecedented store expansion” by rivals and a price war hurt profits and caused “significant disruptions” to the operating environment.
Executive anxiety extends beyond consumer companies. Elevator maker Otis Worldwide saw new-equipment orders in China fall by double digits in the second quarter, forcing it to cut its outlook for growth out of Asia. CEO Judy Marks told analysts on a quarterly earnings call that prices in China were down roughly 10% year over year, and she doesn’t see the pricing pressure abating. The company is turning to productivity improvements and cost cutting to blunt the hit.
Add in the uncertainty created by deteriorating U.S.-China relations, and many investors are steering clear. The iShares MSCI China exchange-traded fund has lost half its value since March 2021. Recovery attempts have been short-lived. undefined undefined And now some of those concerns are creeping into the U.S. market. “A decade ago China exposure [for a global company] was a way to add revenue growth to our portfolio,” says Margaret Vitrano, co-manager of large-cap growth strategies at ClearBridge Investments in New York. Today, she notes, “we now want to manage the risk of the China exposure.”
Vitrano expects improvement in 2025, but cautions it will be slow. Uncertainty over who will win the U.S. presidential election and the prospect of higher tariffs pose additional risks for global companies.
For now, China is inching along at roughly 5% economic growth—down from a peak of 14% in 2007 and an average of about 8% in the 10 years before the pandemic. Chinese consumers hit by job losses and continued declines in property values are rethinking spending habits. Businesses worried about policy uncertainty are reluctant to invest and hire.
The trouble goes beyond frugal consumers. Xi is changing the economy’s growth model, relying less on the infrastructure and real estate market that fueled earlier growth. That means investing aggressively in manufacturing and exports as China looks to become more self-reliant and guard against geopolitical tensions.
The shift is hurting western multinationals, with deflationary forces amid burgeoning production capacity. “We have seen the investment community mark down expectations for these companies because they will have to change tack with lower-cost products and services,” says Joseph Quinlan, head of market strategy for the chief investment office at Merrill and Bank of America Private Bank.
Another challenge for multinationals outside of China is stiffened competition as Chinese companies innovate and expand—often with the backing of the government. Local rivals are upping the ante across sectors by building on their knowledge of local consumer preferences and the ability to produce higher-quality products.
Some global multinationals are having a hard time keeping up with homegrown innovation. Auto makers including General Motors have seen sales tumble and struggled to turn profitable as Chinese car shoppers increasingly opt for electric vehicles from BYD or NIO that are similar in price to internal-combustion-engine cars from foreign auto makers.
“China’s electric-vehicle makers have by leaps and bounds surpassed the capabilities of foreign brands who have a tie to the profit pool of internal combustible engines that they don’t want to disrupt,” says Christine Phillpotts, a fund manager for Ariel Investments’ emerging markets strategies.
Chinese companies are often faster than global rivals to market with new products or tweaks. “The cycle can be half of what it is for a global multinational with subsidiaries that need to check with headquarters, do an analysis, and then refresh,” Phillpotts says.
For many companies and investors, next year remains a question mark. Ashland CEO Guillermo Novo said in an August call with analysts that the chemical company was seeing a “big change” in China, with activity slowing and competition on pricing becoming more aggressive. The company, he said, was still trying to grasp the repercussions as it has created uncertainty in its 2025 outlook.
Few companies are giving up. Executives at big global consumer and retail companies show no signs of reducing investment, with most still describing China as a long-term growth market, says Dana Telsey, CEO of Telsey Advisory Group.
Starbucks executives described the long-term opportunity as “significant,” with higher growth and margin opportunities in the future as China’s population continues to move from rural to suburban areas. But they also noted that their approach is evolving and they are in the early stages of exploring strategic partnerships.
Walmart sold its stake in August in Chinese e-commerce giant JD.com for $3.6 billion after an eight-year noncompete agreement expired. Analysts expect it to pump the money into its own Sam’s Club and Walmart China operation, which have benefited from the trend toward trading down in China.
“The story isn’t over for the global companies,” Phillpotts says. “It just means the effort and investment will be greater to compete.”
Corrections & Amplifications
Joseph Quinlan is head of market strategy for the chief investment office at Merrill and Bank of America Private Bank. An earlier version of this article incorrectly used his old title.
