Research from blockchain analytics firm Bitquery has identified a significant gap between the apparent profitability of top memecoin traders and the returns available to investors who copy their trades.
An October 22 investigation examined 3,170 wallet-token positions with reported gains of at least $100,000 between October 2025 and August 2026. Of the $752.5 million in total gains across these positions, only 26% met Bitquery's criteria for conventional market trading.
The study found that 51% of gains involved wallets selling tokens received from other addresses rather than tokens they purchased themselves. Another 13% exhibited patterns of potentially coordinated trading, while 10% could not be conclusively classified.
The Transfer Problem
Bitquery identified 1,579 profitable positions where most tokens sold had arrived through transfers rather than purchases. Of those, 1,104 could be traced to addresses associated with the token's creator.
This arrangement creates a fundamental problem for copy traders. Tracking platforms calculate profits by subtracting recorded purchases from sales. A wallet receiving tokens through transfers can display significant profits without recording any acquisition cost. Copy traders monitoring such addresses would see sales without receiving purchase signals needed to enter positions at comparable prices.
The practice appears to be accelerating. Transferred-token sales accounted for seven of every ten large wallet wins in August, after remaining below 100 cases monthly until July.
Wash Trading Concerns
Bitquery also identified wash trading patterns among the largest reported gains. Fifteen of the 25 largest reported gains met the firm's criteria for wash loops, where concentrated buying activity coincided with direct financial links between wallets.
One example involved a wallet that spent $4,223 before recording approximately $4.92 million in sales, with another address previously funded by the apparent winner accounting for 99% of buying activity during the holding period.
Implications for Copy-Trading Platforms
Platforms like GMGN allow investors to automatically replicate trades from monitored wallets. GMGN's documentation includes warnings identifying addresses that receive tokens without purchasing them or sell more than their recorded acquisitions. However, the platform executes purchases based only on buying transactions made by monitored wallets, leaving transferred inventory unaddressed.
Additional obstacles face copy traders, including liquidity filters, market capitalization thresholds, transaction-size limits, and a 1% handling fee per transaction. Slippage and execution delays can further reduce returns, particularly for wallets trading rapidly.
Bitquery did identify some genuinely profitable activity in its sample, including one position that generated $3.3 million across 3,632 trades. However, the study did not examine copy traders' actual performance or assess whether profitability rankings on wallet leaderboards account for transferred inventory.
