November 14, 2023

Evaluating GROK, the new Elon-inspired meme coin

GROK ($GROK), a new cryptocurrency that got its name from Elon Musk's newest artificial intelligence (AI) product, has emerged as the latest trending meme coin at the moment. Given the Tesla/SpaceX/Neuralink/X owner's previous track record of influencing the market movements of other meme coins such as Dogecoin ($DOGE), it's not surprising that the emergence of $GROK is being heavily scrutinized.

The GROK meme coin was launched on November 4, around the same time that Elon Musk announced his Grok AI system. $GROK quickly skyrocketed in price as more exchanges started listing the token, to a point where it reached $160M in market cap eight days after launch. On November 13, well-known crypto investigator ZachXBT raised the alarm on $GROK, alleging that its online accounts were repurposed from previous meme coin projects and that its team burned $1.7M worth of $GROK to reduce token supply. As a result, $GROK saw its price drop by 74%, from a record high of $0.027 to as low as $0.007.

In this article, the 0xScope team provides further context on the rise and setbacks of $GROK, including the several copycats that emerged from the token's early success, and the actions taken by Smart Money addresses regarding the meme coin.

GROK-related copycat tokens and rug pull potential

Due to the rapid increase in the price of $GROK tokens, many people have started deploying copycat meme coins, including GROK2.0, GROK 0.5, BABYGROK, GROK BRC20, GROK BSC, and GROK on Solana.

There are historical precedents to this recent proliferation of copycat GROK tokens. In the past, whenever popular meme coins like Dogecoin emerged, there would be related tokens with similar names. For instance, after $DOGE, there was BabyDoge, and after $PEPE, there was Pepe2.0, among many other copies. These related tokens also experienced significant but short-term price surges.

These copycat tokens also become popular because many crypto enthusiasts who might have missed previous opportunities with the original meme coins end up buying these meme coins, hoping to benefit from their bull run potential. However, at the same time, some unscrupulous individuals seek to exploit the situation to make a quick profit. They choose the currently hottest tokens and, leveraging people's fear of missing out (FOMO), begin deploying these tokens, waiting for unsuspecting traders to take the bait.

Combine meme coin FOMO with crypto scam experts, and it often leads to disastrous results. The lifecycle of copycat meme coins tends to be very short, typically lasting only a few days, and they often end up being rug pulls, similar to what happened to Dogecoin copycat TeddyDOGE in 2022. Sometimes, even the popular meme coins themselves are subject to rug-pull speculations, like when $PEPE crashed in August 2023, following its team's decision to send millions of dollars worth of $PEPE to exchanges.

Nevertheless, regardless of the bigger-than-usual risks associated with meme coins, the most popular assets, including $GROK, bring in significant trading volumes, so many exchanges end up listing the tokens anyway.

Vigilance within the Web3 community is crucial to ensure that investors stay safe from potential scams and rug pulls. Crypto observers and buyers are advised to use a combination of tools such as Scopescan’s Money Flow and Entity Analysis dashboards before being exposed to risks associated with meme coins.

Smart Money on GROK

Scam-related allegations notwithstanding, meme coins have become frequent sources of trading profits for Smart Money addresses, or the addresses of some of the most profitable traders in the Web3 space. The 0xScope team looked into the recent trading performance of $GROK for Smart Money investors included in Scopescan's Smart Money Signals dashboard.

According to our Smart Money analysis, out of 1,000 addresses tracked, 80 bought $GROK this week. Their average cost is $0.0051, while the current price of $GROK is $0.012. This implies that Smart Money addresses that have bought $GROK recently saw profit margins of 190%. Despite the recent drop in $GROK's price, the realized profit ratio among Smart Money is only 33%, which means only one-third of the profits from $GROK have resulted from the sale of the tokens. This possibly suggests that many Smart Money remain optimistic about Grok and its future upward potential, at least until the next irresistible profit opportunity comes.

For crypto investors who still want to get in on the $GROK trading action, it's important to look into which addresses hold major holdings in the meme coin. According to Scopescan's Whale Watch dashboard, whares represent 70.80% of $GROK's total supply. About 73.23% of all $GROK tokens are from externally-owned accounts (EOA), or addresses that are not affiliated with exchanges and other related entities.

The address grokwhale.eth is the largest EOA holder of GROK, currently holding a total of 251.5M $GROK, or 3.81% of the total token supply. This address began buying $GROK just 20 minutes after token deployment and continued accumulating before November 11, spending a total of 128 ETH (approximately $258,000) on its $GROK holdings.

In just a week, the assets in this address surged to $3.54M, a 13.7x increase, peaking at $6.9M. However, as of now, the address has not yet sold off its $GROK position, and it has even transferred some tokens to a new address.

If you hold GROK, it's advisable to monitor the grokwhale.eth address, as well as the addresses associated with the $GROK team. Considering the current token liquidity, if they decide to sell significant amounts of $GROK, the token price is likely to approach zero.

In conclusion, while meme coins like $GROK tend to capitalize on the latest social media trends (including those driven by Elon Musk, a popular figure among Web3 enthusiasts), potential buyers are encouraged to look closely into the recent actions concerning the tokens of their choice. Scopescan's tools, cited earlier in this article, can help with your investigative needs and protect your portfolio against potential rug pulls.

Visit 0xScope

0xScope | Scopescan | Link3 | X | Telegram | Youtube | Discord