Is Xiaohongshu Being Inundated by the 'Cryptocurrency Trading Cohort'?

Recently, Xiaohongshu has witnessed a proliferation of virtual currency referral content, masquerading as 'cryptocurrency trading experiences,' 'beginner perks,' and 'cryptocurrency circle insights.' This includes sharing rapid-wealth-accumulation tales like 'turning 5,000 yuan into 1 million,' selling paid resources ranging from 29.9 to 128 yuan, and dangling high-paying job opportunities with claims of 'annual salaries of 1 million.' All these efforts are aimed at steering users towards overseas trading platforms for copy trading.

According to a report by Beijing Business Daily, a journalist, posing as an ordinary user, embarked on a month-long exploration, experiencing the entire process from content exposure to actual financial losses. Under the guidance of a copy trading team, the journalist engaged in leveraged trading via an overseas app, resulting in consistent losses from the outset, clearly indicating a fraudulent scheme.

The widespread emergence of such content on the Xiaohongshu platform not only poses financial risks to users but also raises concerns regarding regulatory compliance and user trust.

The Dilemma of Expansion: Content Quality Compromise and Commercial Tensions

Over the past few years, Xiaohongshu's content landscape has expanded at an unprecedented rate.

Initially focusing on core areas like beauty and fashion, it has gradually broadened its horizons to include food, travel, fitness, pets, and even professional categories such as education and finance. This platform, once dedicated to lifestyle sharing, now hosts a diverse array of content. The influx of the 'cryptocurrency trading cohort' epitomizes this trend of content generalization.

Platform data reveals that by early 2025, Xiaohongshu's monthly active users surpassed 330 million, with daily active users reaching 130 million and over 40 million pieces of content published daily. While this rapid growth in users and content has brought significant traffic, it has also introduced hidden risks.

As content categories and user demographics expand rapidly, issues such as false content and marketing spam have surfaced. In the first half of 2025, Xiaohongshu removed 3.2 million fake posts, 10,000 fake persona accounts, 600,000 low-quality AIGC-generated contents, and banned over 10 million accounts involved in black and gray industries. Behind these figures lies a continuous erosion of community authenticity and trust.

The expansion of content categories is just one facet of Xiaohongshu's efforts to break through growth bottlenecks; another, more crucial strategy, is the construction of an e-commerce ecosystem.

In 2020, Xiaohongshu attempted to collaborate with Taobao's external links but shifted its focus to building its own e-commerce system two years later. From the 'account-store integration' mechanism in 2021 to the 'store opening' plan in 2022, and now elevating the 'marketplace' entrance to a prominent position on the homepage navigation bar, the platform has been methodical in its commercialization journey.

However, the prevalent e-commerce content has further altered the community's original ambiance. As 'authentic sharing' is gradually replaced by soft advertising and promotional content, users are beginning to perceive a shift in the community's atmosphere.

The imbalance between Xiaohongshu's commercialization and content governance has drawn significant attention from regulatory authorities. For instance, on September 11, the Cyberspace Administration of China issued a statement claiming that Xiaohongshu failed to fulfill its primary responsibility for information content management, frequently presenting multiple pieces of harmful information, such as celebrity gossip and trivial matters, in its trending search rankings, thereby undermining the online ecosystem. Relevant departments have taken disciplinary actions against it.

If Xiaohongshu continues to allow high-risk content to proliferate and excessively pursues e-commerce conversions, it may face the dilemma of losing loyal users. Finding a balance between growth and maintaining the platform's tone will be a critical proposition for its next stage of development.

The Monetization Dilemma: Dual Pressures from Advertising and E-commerce

In 2025, as content platforms strive for profitability, Xiaohongshu's urgency for commercialization has intensified.

In August, Xiaohongshu internally announced the establishment of a 'Large Business Segment,' merging the commercial and transaction departments into one while maintaining the original first-tier department structure. Led by COO Konan and co-led by CMO Zhiheng, the leadership team is concentrating efforts to drive commercialization.

Previously, Xiaohongshu's advertising and e-commerce business lines operated independently, allowing focused development in their respective areas but also causing resource dispersion and insufficient synergy. The merger into a 'Large Business Segment' reflects Xiaohongshu's profound understanding of its current commercialization dilemma: 'advertising growth is challenging, and e-commerce breakthroughs are difficult.'

However, reality is far more complex than envisioned.

In the advertising market, Xiaohongshu faces dual pressures, competing for budgets with traditional social media platforms while contending with the fierce competition from short-video platforms like Douyin and Kuaishou. The growth pressure is substantial. Data shows that in 2024, Xiaohongshu's advertising revenue was 21.6 billion yuan, accounting for 72% of its total revenue but also highlighting its over-reliance on advertising.

Xiaohongshu, which rose to prominence with its grassroots marketing ecosystem, once became the preferred advertising platform for brands in beauty, fashion, and maternal-child products due to its high user trust and precise interest tags. However, as platforms like Douyin and Kuaishou have built a 'search + recommendation + live streaming' trifecta advertising system, Xiaohongshu's differentiated advantage is gradually being diluted.

More alarmingly, frequent occurrences of fake grassroots marketing and bot-generated reviews have shaken brands' confidence in advertising ROI. Once authentic sharing is replaced by paid soft advertising, user trust will be eroded, and the ceiling for advertising revenue will become apparent.

In the e-commerce sector, traditional giants like Taobao and JD.com have already formed complete ecological closed loops, while content platforms like Douyin and Kuaishou are rapidly seizing market share. Facing blockades ahead and pursuers behind, Xiaohongshu's path to e-commerce breakthrough is particularly challenging.

Compared to traditional e-commerce platforms, Xiaohongshu has significant shortcomings in e-commerce infrastructure. Weaknesses in the payment system, logistics network, and supply chain management directly limit its transaction experience and scale expansion.

In terms of merchant resources and product diversity, Xiaohongshu also lags behind Douyin and Kuaishou. Public data shows that in 2024, Xiaohongshu's e-commerce GMV reached 400 billion yuan. In comparison, Douyin's e-commerce GMV was approximately 3.5 trillion yuan, a 30% year-over-year increase, while Kuaishou's e-commerce GMV reached 1.39 trillion yuan, a 17.3% year-over-year increase.

Notably, Xiaohongshu recently acquired Dongfang Electronic Payment Co., Ltd., officially obtaining a third-party payment license. This strategic move is significant, marking Xiaohongshu's step towards completing a key piece of its e-commerce ecosystem. While the acquisition of a payment license brings new possibilities for Xiaohongshu's e-commerce, there is still a long way to go from 'having payment' to 'having a thriving ecosystem.'

There is no standard answer for content platform commercialization. Whether Xiaohongshu can find its survival space amid the dual pressures of advertising and e-commerce remains uncertain.

Returning to the Community Essence: Rebuilding the Trust Triangle

As the content e-commerce competition enters its second half, true value lies not only in pursuing scale but also in rootedness in the community ecosystem. Xiaohongshu needs to find a balance point between content governance, commercial norms, and user experience to avoid sacrificing long-term ecological value for short-term gains.

In the short term, advertising remains Xiaohongshu's revenue pillar, and improving the efficiency and quality of advertising business is a top priority. Optimizing advertising precision through technological means, reducing interference with user experience, and exploring more native, content-driven advertising formats may be effective ways to alleviate current content dilemmas.

In the medium term, the e-commerce business must carve out a differentiated path. Rather than competing head-on with traditional e-commerce platforms like Taobao and JD.com in all categories, Xiaohongshu should focus on its most advantageous lifestyle sectors, delving deep into niche areas like specialty boutiques and designer brands.

For example, Bilibili remains rooted in otaku community culture, while Dewu focuses on trendy product authentication and genuine product guarantees. Xiaohongshu's core competitiveness ultimately lies in the trust relationship built through 'authentic sharing.' This emotional connection, formed through content grassroots marketing, user interaction, and consumption feedback, is the platform's most difficult-to-replicate moat.

In the long term, Xiaohongshu needs to rethink its core value proposition.

In an increasingly tense relationship between commercialization and content ecology, the platform needs to find value points that can continuously attract users. This may mean making trade-offs in certain areas, such as appropriately controlling growth speed to protect the community atmosphere or focusing on specific user groups rather than pursuing universal coverage.

In summary, Xiaohongshu's path to balance remains long and arduous. The tension between content governance, commercial norms, and user experience will not disappear, and the contradiction between scale expansion and ecological protection will persist. However, it is precisely in addressing these challenges that the platform will find its survival wisdom and development path.