The launch of meme coins by the new US President and the First Lady has been of mixed success. Always one with an eye to a hot trend, Donald Trump launched his meme coin ahead of his inauguration this week, but pro investors have been taking a dim view of it.
For a president whom many within the crypto sector see as an agent of change for the industry, helping to usher it into the mainsteam, $Trump is not the greatest advert. CNN called $Trump “a functionally worthless asset that trades on hype…”
Official Trump ($Trump): not what the crypto sector was hoping for
Also called Official Trump, the meme coin soared to $14bn in market cap within 48 hours of being launched, effectively capitalising on the hype around the inauguration of the president. It has also been highly profitable for clan Trump, generating over $50m in fees within a day. Investors in $Trump are looking at lock ins of at least three years however.
“Tokens like $Trump and $Melania show how blockchain can be used to monetize communities, beliefs or shared ideas,” said David Doss, a US hedge fund manager who runs the CKC cryptocurrency fund. “These tokens bring new ways to connect people, but they also come with risks. Before making any commitments, investors would do well to assess factors such as market volatility, liquidity and the underlying tokenomics that determine the asset’s value potential. These are all areas where experienced guidance and ongoing analysis from professionals can quietly enhance decision-making.”
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“Grifty and cheap”
Some Trump fans within the crypto industry were openly critical of the launch of $Trump, with Tom Schmidt, a partner at crypto venture capital firm Dragonfly calling $Trump “grifty and cheap.” Nic Carter, a partner at Castle Island Ventures, said that while he was hoping for some liberalisation of cryptocurrency regulations in the US with Trump in the White House, the launch of the Trump meme coins “does the opposite of validating us, it makes us look completely unserious.”
“On one level though, with a total market cap of around $120 billion, meme coins as a whole can no longer be dismissed as entirely frivolous and inconsequential,” said Ken Odeluga at CF Benchmarks in the UK. “Meanwhile, the importance of their educational role as more accessible on-ramps into crypto’s underlying technology, which is still largely abstruse to the average consumer, should also not be underestimated.”
While many crypto pundits are critical of the launch of both $Trump and $Melania, which they argue are undermining the credibility of the cryptocurrency sector as a whole, the launch of the $Melania meme coin has, if anything damaged $Trump itself.
“My only criticism of the Trump meme coin was the fact that he allowed Melania to launch her own meme coin by draining a portion of the $Trump liquidity pool,” said Manu Choudhary, CEO of DMALINK in London, an ECN for digital assets. “This unsurprsingly sent the coin down from just under $75 to $35.”
Meme coins: don’t reject them out of hand
Meme coins are becoming increasingly accepted by pro traders, but traders and fund managers are not embracing all of them, and it sounds like the jury is still out on $Trump and $Melania. CF Benchmarks for example uses strict regulatory benchmark guidelines in place in the UK, and tracks the top three meme coins by market cap, including DOGE and SHIB. Having “the hottest digital meme on earth” does not meet their criteria.
The Trump administration this week announced that Mark Uyeda would be the acting chair of the SEC. He in turn announced that he was setting up a crypto task force to be led by Hester Peirce. Many within the crypto industry are hoping that US banks will soon be allowed to custody crypto.
“The involvement of President Trump’s family with the Ethereum-based DeFi venue World Liberty Financial along with the launch of the TRUMP token have portended the approach the new SEC will have towards digital assets,” said specialist digital assets investment bank FRNT in a note this week. “Some crypto projects, such as Consensys’ Ethereum layer-2 Linea have indicated interest in launching tokens under the new regime.”