During his first term in the White House, Donald Trump was fairly skeptical about cryptocurrency, but this time around his administration is all in.
And I'm not just referring to his all-encompassing crypto executive order that's meant legitimize digital assets… Trump is also betting big on memecoins.
If the scope of your news consumption doesn’t cover the intersection of politics and crypto, you might not know a lot about $Trump—the president’s own digital token.
When Trump introduced his memecoin shortly before Inauguration Day, supporters rushed to invest, thereby fueling an initial spike in market value.
That value has since tumbled considerably, wiping out about $2 billion in combined value among owners of the digital coin. So is this the beginning of the end for the Trump coin?
The answer could determine if and when memecoins achieve the sort of relative acceptance among investors that more robust cryptocurrencies enjoy.
The making of a memecoin
As its name implies, memecoins are often based on internet memes or other fairly frivolous subjects—and that’s why their developers, owners, and the general public often don’t take them very seriously.
While even established cryptocurrencies are known to be volatile and thus carry a great deal of speculative risk, Bitcoin and a few others have seen growing acceptance as part of broader investment plans.
Memecoins, on the other hand, are notoriously fickle. Their value is generally derived from novelty or as a source of amusement rather than as a legitimate form of currency.
Like NFTs before them, memecoins tend to lose value quickly after the initial speculation wears off. And $TRUMP was no exception:
- It achieved top-15 crypto status shortly after its January 17 release
- The coin’s market cap hit a high of about $14 billion before starting to fall
- A token traded for about $15 yesterday compared to a $75 high
But this wasn’t Trump’s first crypto rodeo. He offered his own NFT a few years ago and first lady Melania Trump debuted a memecoin last month around the same time as he did.
It’s not all fun and games
Collecting memecoins might be a popular 21st-century pastime, but some industry insiders are worried about the long-term implications.
“This pattern of celebrity-driven token launches, particularly from political figures, potentially marks a concerning trend in crypto markets where influence and liquidity manipulation could overshadow fundamental value creation,” said Dan Hughes of the crypto firm Radix.
With Trump owning 80% of the venture, handing out tokens to people who have previously bought his merchandise, and generating at least $100 million in trading fees, the fears of manipulation are real.
At the same time, optimism remains high among many supporters of both Trump and crypto.
The bottom line is that if you want to inject a little levity into your portfolio and can afford to lose your investment, you might want to give memecoins a look.
If you’re counting on $TRUMP or any other digital token to make you an overnight millionaire, however, you should probably have a solid backup plan.
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